At first, closing on your new home may sound a little scary. After all, you're making that final decision to sign a sizeable chunk of money over to the bank that will be handling your mortgage. It's not exactly something that happens every day, and it's something that many people will never get to experience in their lives.
At your closing, you'll be handed a pretty large pile of papers to sign. Don't let this overwhelm you. The title company will be on hand to walk you through the process, along with your real estate agent and, in some cases, your lawyer. All of these people are there to ensure the process goes as smoothly as possible. They will also answer just about any question you have, so ask away. When it comes to buying a home, there's no such thing as a stupid question, and it's best to be as informed as possible about the process so you can understand exactly what you're signing.
What to do before you close
Before it comes time to close on your home, you should run through a few things. One of these things should be a final walkthrough of the property you intend on buying. At this point in the process, you've likely visited the home more than once and seen all that you need to see, but one last walkthrough never hurt anybody. By this time, you would have already hired a home inspector to inspect the house and if there were any repairs that needed to be made by the homeowners before closing, now is a good time to make one more visit and check to see if everything was taken care of.
Here are a few others things you need to do before your closing date arrives:
- Obtain homeowners insurance. Most of the time, you are required by your lender and by the title company to purchase a homeowners insurance policy and present some proof of purchase before you close on the home.
- Obtain title insurance. Along the same lines as your homeowners insurance, your lender will also require that you purchase title insurance, which is a simple form of insurance to protect you, the buyer, from any potential problems with the title after closing. You also should have proof of title insurance at closing.
- Transfer utilities accounts. One of the most important things to take care of before you close on your home is to call up the utilities companies in your area that handle the electric, gas, water, Internet and phone services and set up an account for your new home so that when you arrive after closing, you'll have running water and fully functioning electricity.
- Obtain money for closing costs. Before your closing date, the title company and your lender will typically notify you of exactly how much money you will owe at closing. This amount will include the down payment you're placing on the home, the title fees, and all other related closing costs. Cashier's checks are required to pay for your closing costs, so you'll need to obtain those prior to closing. You'll also need to make sure you have sufficient funds in your bank account to cover the costs.
- Ask what you'll need to bring with you to closing. Questions are key during a process as complicated and involved as closing on a home, so make sure to ask the lender, real estate agent or title company any questions that come to mind during this time leading up to your closing date. You want to be as prepared as possible, including making sure you know what exactly you'll need to bring with you on the day of closing.
Questions for closing
Once you've put the finishing touches on everything, it's time to close and seal the deal on the purchase of your new home. You'll likely have a lot of questions during the actual closing process, but here are some of the most important questions you should ask to get you started:
- How much will monthly mortgage payments be? This is probably going to be one of the first questions that comes to mind during the closing process, and the HUD settlement papers that you will be presented with during the closing should contain all the information about your monthly payments, as well as when your first mortgage payment will be due after you close on the house. Typically, your first mortgage payment will not be due until a month or two after you close, depending on what day of the month you close.
- When will I receive the keys to the home? Of course you're excited to get the keys in your hand and feel that it's finally official. Usually, you'll receive the keys at the end of the process, when you've finished signing all the papers you need to sign, but you should ask to make sure.
- When will I receive my title policy/deed? These are also important questions that you should ask during closing, and the title company will be glad to answer them for you and clarify everything regarding when you will be receiving your title policy and deed, as well as copies of all the documents you signed during closing for you to keep with your records.
- When will I receive any refunds for overpayment? Occasionally, you may pay more at closing than you're supposed to, either do to some minor miscalculations on the part of the lender or title company. In that case, you'll receive a check in the mail with a refund for your overpayment.