After the shopping, negotiations, and mortgage approval process, the final step of buying a home is closing on your new property. It’s an exciting day, but some homebuyers are confused about the specifics that closing entails. We’re going to demystify the mortgage closing process today.
Who Will Be There
You and your spouse, the seller, your real estate agent, and a representative from the closing company are people who typically attend a closing. In addition, your mortgage originator, your attorney, the seller’s attorney and a representative from the escrow company may also be present.
How to Prepare
Make sure you know how to get to the location so you can be on time. Bring your identification, a copy of the sales contract, your bank paperwork, and the home inspection report. Expect to sign your name repeatedly during the process, as there are mounds of paperwork involved in a closing.
What Costs to Expect
There are certain costs associated with closing on a property, whether you’re getting a traditional mortgage, a home loan for bad credit, or an FHA or VA loan. Be prepared for:
- Down Payment – Your mortgage originator will share this amount with you beforehand.
- Closing Costs – These can vary between 3-7% of the home price.
- Points – If you are paying for points so your interest rate can be lowered, you’ll need to be ready for that at closing.
- Title insurance – This insurance protects against future issues with the title.
Usually, buyers can cover these costs either with a personal check or a cashier’s check.
What Goes On
All parties gather on the scheduled date and time, usually at the title company’s office. The homebuyer then reviews and signs all the documents involved in the closing. These include but aren’t limited to the deed of trust, the promissory note, and the closing disclosure. The buyer provides proof of homeowner’s insurance and inspection and pays the closing costs. The lender splits the funds and pays them out to the appropriate parties.
At the end, you’ll receive the keys to your new property!
How Long It Lasts
A smooth closing can last about an hour, but a complicated closing or one that hits snags can last several hours.
Things That Can Go Awry
Avoiding potential issues is key for a closing that goes off without a hitch. Errors in documents, a title that hasn’t been cleared, money transfer snags, miscommunicated buyer/seller negotiations, and negative information showing up on your credit report at the last minute are all things that can prolong or derail the process.
It’s important to be well-prepared and understand what you can expect during your closing. Your real estate agent and loan officer, as well as the title company representative, can answer specific questions so there aren’t any nasty surprises on closing day.
MIG will take the time to answer all your questions regarding the closing process so that you are comfortable and confident every step of the way. Contact us today!