Closing day is almost here! Before you sit down at the table and get the keys to your new home, there are a few things you need to get squared away.
1. Purchase Homeowners Insurance
Unless you purchase your home with cash, you will need homeowners insurance. Lenders require you to buy an insurance policy to protect the property in case of loss or damage. Typically, you will purchase a policy equal to the replacement cost of your home. You may also consider additional coverage that would replace the items inside your home.
Most lenders will want proof of your insurance policy at least a week before closing. Not sure where to start? Check with your current auto insurance provider. Many insurance companies offer discounts for multiple policies. Your agent or lender may also be able to suggest insurance providers.
2. Sign Closing Disclosure
By now, you’ve worked with your lender to get your mortgage loan approved. About a week before closing day, you should connect with your mortgage lender and finalize the details, including locking in your interest rate. This is an important step; an increase in the interest rate will also increase your monthly payment for the life of the loan.
You will also receive a closing disclosure or CD. This is a finalized document from your lender, which they must provide to you at least three days before closing. The CD is several pages long and details the terms of your loan, including your exact monthly payment and your total closing costs needed on closing day.
If you have been in regular contact with your lender, there shouldn’t be any big surprises. Most lenders will provide you with an estimate, which usually matches the closing disclosure fairly closely.
3. Final Walkthrough
The final walkthrough is your time to inspect the home for any last-minute problems. You will already have had a home inspection with a licensed inspector (usually done shortly after the sellers accepted your offer). If you asked the sellers to repair or replace anything in the home, this work should be completed by the final walkthrough.
You can schedule a final walkthrough for the day of closing or one to two days in advance. Your realtor should work with the sellers’ agent to schedule a time that works best.
During this walkthrough, you will check that everything is functioning correctly and that all repairs have been completed. You can also check that the sellers removed their belongings and that the house is in good condition.
If you have any concerns at the walkthrough, it’s essential to address them immediately. Major issues, like electrical, plumbing, or HVAC problems, inadequate repairs, or new damage, should be fixed by the seller before closing. In some cases, the sellers may offer cash at closing in lieu of fixing the damage. If you or your agent are not comfortable with this arrangement, closing should be delayed until a suitable solution is arranged.
4. Double Check Funds. Then, Check Them Again.
Now that you have the closing disclosure, you’ll need to gather the necessary funds. Lenders may accept a cashier’s check or require a wire transfer to cover closing costs. This isn’t something you can do last-minute. Contact your financial institution as soon as you have final payment details to double-check funds and start a wire transfer if necessary.
Then, check your funds again. Make absolutely certain you have enough in the bank to clear these necessary costs before beginning a wire transfer.
5. Gather Important Documents Before Closing Day
You will need several documents on closing day. Gather them a day or two beforehand and have them ready to go. You will need:
- Photo ID
- A copy of your contract (your real estate agent should have this as well)
- The closing disclosure (your lender will have a copy, but it’s best to have it handy)
- Proof of homeowners insurance
- Proof of wire transfer OR your cashier’s check
- A checkbook for any other fees
- Your patience and a rested hand ready to sign lots of paper!
After all is said and done, you’ll get the keys to your new home. Congratulations!
Want to know more about the closing process? Check out this article for more information!