Closing is the last big item on the list of purchasing a home. This step is so crucial that I decided that it deserves its own separate blog. The devil is in the details and I wanted to make sure I gave you the entire process for closing on your home. So take notes and visit this site as many times as you need to.
Unfortunately there is no video for this weeks blog :’(
Documents
There are a couple of important documents that go along with closing. These are papers that you need to sign, the seller needs to sign, the mortgage company, etc. Here is a list of the important ones.
Closing Disclosure – (say that five times fast), this form is standard across the country. It details the closing costs and information about the loan that you have. They legally have to give it to you at least three days before closing.
Sellers Disclosure – this is something the seller fills out. It will detail all of the known defects of the property. When they provide this to you, you can request more information on damage, or order an inspection.
Title Documents – more than likely this will include a title search from the company. Making sure that there are any liens on the property that could prevent you from paying old debts.
Loan Application – is what you will have after you apply for your loan. They will bring this to closing for your review. They will also make sure there aren’t any changes in your financial well being.
Homeowners Insurance
You are required to purchase Homeowners Insurance before you purchase your home. Sometimes the cost of that plan is rolled into the closing cost. They will then take the money out of the escrow account.
It’s best to either ask for a recommendation for an insurance agent, or shop around for the best rate and coverage. Most of the time you can even bundle your auto insurance with the same company and they will give you a discounted rate.
Transfer Utilities
This will be done over the phone, you will let the companies know that you are closing on a home and would like to transfer the utilities on this date. This can happen a week or two away from closing. But you do not want to forget about it.
If you are moving into a new area most of the time either the seller or your agent will provide you with contact information of the companies. Beware some utility companies do require a turn on fee that is a lump sum payment. But for me they returned that payment after the first year.
Money
This is when you will take your closing costs and add all of the numbers up. The Closing Costs typically include the fees and such that are paid to your lender and other third party companies that help you close on your loan. You could also have to pay PMI which is insurance on the mortgage for the mortgage company.
When you get that number together then you need what is called cash to close. Cash to Close is the total amount of money you need to bring to closing with you. This amount is usually about 20% of the cost of the home but could be as little as 3%. If you have made earnest money deposits earlier in the process
What to Bring
You will need certain items for when you come to the table to actually close. Those things include a form of identification like your driver’s License. You will also need a cashiers check for the amount that was determined by the cash to close. Proof of Insurance is also something that is required to sign for the loan. And lastly you will need to bring a good pen. Probably not because they will have pens there. But you will be signing a lot of papers.
Rob’s Opinion
I actually had to close on my home outside under a tent. That was due to Covid still being a part of our lives. I don’t remember a lot of closing. But I do remember that I had to sign a lot of papers. And by the time it was over my hand was cramping up.
During my closing I had a lot of representatives there. Such as my Real Estate Agent, My Mortgage Broker, and a representative from the builder. The day before I closed my broker called and told me she hasn’t received my letter for the loan and we had to possibly push back the closing date. Luckily the approval came in a couple hours before closing and I was able to officially become a homeowner.
I know this process can be very overwhelming, but closing on your home is a beautiful thing. If you liked this content please check out some of the other articles I have about buying your first home. We are creating Generational Wealth one post at a time.
