The process to get to a home closing can seem like a lifetime when you are purchasing your first home. From the time you decided you wanted to start shopping for a home and found the right mortgage broker in Chicago to making an offer and negotiating on the home you want to buy, all of your efforts start to become a reality once your broker says the lender cleared you to close.
Yet, before you take ownership, there is still one major aspect to buying the home you will need to complete: the closing day. There are several processes specific to closing on a home. You need to be aware of these, ahead of time, so you will be prepared and help avoid the closing falling through at the last minute.
The first thing you will want to do is schedule the closing with help from your broker. When deciding on a date, it is highly recommended to avoid the last day of the month. If there should be an unexpected delay that pushes the closing out into the next month, it often increases closing costs for both the buyer and the seller—like prepaid interest and prepaid property taxes.
It is better to schedule the closing in the middle of the month. This way, if the unexpected does occur, you have or the seller has time to resolve any outstanding issues and reschedule the closing prior to the end of the month.
There will be many forms and documents for you to review and confirm they match original agreements before they are signed. Ideally, you should plan on taking the day off of work or, at least, half a day to complete your closing.
Once you have a confirmed the closing date and time, your next step is to arrange the final walk-through of the home at least one day prior to the closing. A final walk-through is needed to be performed to verify there are no alterations, changes, or damage to the property that have occurred since the seller accepted the sales offer and the purchase agreement was signed.
Sometimes there could be discrepancies, and you will want to make sure these are resolved before sitting down at closing or by requesting an addendum be added to the sales contract that outlines the seller’s responsibilities for ensuring the discrepancies are resolved to your satisfaction. The addendum should also contain details about what recourse you have should the seller fail to live up to their end of the agreement.
When you arrive on the closing day, you will want to make sure you bring various documents and cash. It is beneficial to make a checklist of items and ensure all of these are completed three to seven days in advance of the closing:
Keep in mind, the actual cash and documentation you need to bring along can vary. For instance, your down payment may already be held in an escrow account, so you would just need to sign that over to the seller during the closing. Your mortgage broker will inform you what you need to bring and what they will bring with them to the closing.
First and foremost, you want to ensure that all of the paperwork is complete and processed properly beforehand. Your loan officer can help you with all kinds of paperwork, from gathering the proper documents to reporting gift funds that you are using to purchase a home. Having everything finished at least three to seven days before the day arrives will help prevent you from being held up or running into any roadblocks at closing. Below is a brief overview of your closing day checklist.
Having your down payment ready is one of the most important financial aspects of closing on the purchase of a home. It helps to make sure the money isn’t tied up somewhere else. Your down payment will be comprised of an earnest money deposit (good faith deposit) that is used to open escrow and must be delivered within 3 days of the signed contract and the balance of your down payment that is due right before the closing.
If you have an escrow account to hold your money until it’s time to close, it’s important to verify that everything is in place. You’ll want to go back and double check that all of the money that is required is in the account.
When you complete the purchase, you may need cash to close the deal. For this transaction, it is more likely that you will use a cashier’s check, certified check, or wire transfer to cover anything you need to pay for your purchase price and closing costs.
You’ll also need to have your homeowners’ insurance in place before you can take ownership of the property. Make sure that you have proof of your insurance so that you can show it on closing day as part of the other documents that you have.
A Good Faith Estimate of Closing Costs is required by law from your lender or mortgage broker and must be provided within three days of you applying for a mortgage. Have this with you on closing day so that you know the closing costs that are involved.
A copy of your sales agreement contract is also important to have when closing day arrives. It’s always important to have your own copy of a contract so that you know what’s in it, and you can double check to make sure nothing has been changed in the seller’s copy.
Carrying out a home inspection before buying a home is essential. After you have completed the home inspection, make sure that you have the report with you when closing day arrives. It’s also useful to have it with you when you do a final walkthrough, especially if the current owner has agreed to fix anything.
Be sure to have any documents that you supplied your mortgage company to get approval for your loan. With copies of these documents, you will be able to present any necessary evidence while you’re signing paperwork.
Keep in mind, the actual cash and documentation you need to bring along to closing can vary. For instance, your down payment may already be held in an escrow account, so you would just need to sign that over to the seller during the closing. Your mortgage broker will inform you what you need to bring and what they will bring with them to the closing.
As well as bringing necessary paperwork and cash to close for closing day, make sure that you have a photo ID with you.
There will be several important people at the closing. These can vary, based on state and location, but should include:
You and the seller may also elect to have your own real estate lawyers present for the closing. The buyer’s real estate agent might be present at the closing, too.
You’ll need to make sure that you have all of the required closing documents on hand for the buyer and the agents. If you are missing even a single document, then you could end up delaying the closing or possibly even losing the deal. Double-check that you have everything provided to you by your agent ahead of time so that you don’t run into any unnecessary roadblocks.
Be sure that you call everyone to let them know that you are moving. The last thing you want is for your guests to show up at your old house thinking that you still live there; this can reflect poorly on you as it inconveniences your visitors and annoys the new homeowners.
Another reason to let people know that you’ll be moving is so that any mail you have coming to your residence can be forwarded to your new address. The last thing you want is for important documents to be lost or otherwise delayed because you forgot to inform someone about the move.
Make a list of everything important that comes in the mail each month and reach out to those companies so that they can update your mailing address and contact information accordingly.
Don’t forget to cancel your old home insurance policy. Overlooking these details could leave you paying for an extra month or two. Also, make sure that you have arranged for a new policy to cover your new home, as this will be necessary to complete that purchase as well.
In most cases, your insurance provider will be able to transfer your existing policy to your new address. Just let them know if there is any difference in the value of your home, so they can provide you with an up-to-date quote that reflects the new home value.
Remember to cancel your utilities – this means tv, home phone, internet, gas & electric, and any other utilities that you have set up; not doing this can cost you money and can also potentially cause delays and problems for the new homeowners when they go to set up their own utility accounts for that property.
In general, most utility companies can transfer your account to your new home but will often require up to thirty days advanced notice so be sure to let them know that you’ll be moving and tell them your closing date, if possible, this way you’ll benefit from having a seamless transition and won’t need to worry about any extra unexpected utility bills.
Last but not least, it’s nice to do another walkthrough of the home just to make sure that everything looks good and is as it should be for the new homeowners. Remove any garbage that may be in the home, give the floors one last sweep, and make sure that you disconnect any alarm systems that may be installed in the home, or the new owners may have some problems when they show up to start moving their furniture in. Also, remember to double-check that you have turned off any lights or appliances in the home.
In order for closing day to take place, you need to make sure that you have a date set. Your mortgage banker or broker will be able to help you to schedule the closing so that everything will run smoothly.
When you choose a date, it’s highly recommended to avoid the last day of the month. This is because if there are any delays in the closing and it runs into the next calendar month, it could increase the closing costs such as prepaid interest and prepaid property taxes. And, when you do set a date, you should plan to be available for the day or for at least half the day. Try to take the time off work so that you have plenty of time to get all of the paperwork and other things in order when you arrive for closing.
After you have scheduled your closing day, the next thing you’ll want to do is to arrange a final walkthrough of the property in order to check its condition. You should schedule this at least one day before closing so that you have time to make any observations and take action if you notice anything out of the ordinary.
During your walkthrough, you should check for alterations, changes or damage to the property that might have occurred since the accepted your sales offer and you signed the purchase agreement. If there are any discrepancies, you will want to resolve them before closing or by requesting an addendum to the sales contract. The addendum should also contain details about what recourse you have should the seller fail to live up to their end of the agreement.
The closing day involves a lot of paperwork, so be prepared to go through it all. But what actually happens during the closing?
All of these documents are important to sign. It might get a bit boring, but you need to have all of the paperwork in order if you want everything to be official. You might think that you can simply sign everything in a few minutes, but you can’t rush everything.
There are a few different reasons why your closing could fall through and not be completed:
Granted, these types of issues are few and far between, but they do occur. It is better to be aware of them and understand that until all the documents and forms are signed and money exchanged at closing, the sale of the home is not complete.
If you want a closing day on your property to be successful, be sure to find an experienced mortgage company to work with you every step of the way. They can assist you with all your paperwork to help ensure that you are prepared for the big day.
If you have any questions about the closing process or want to apply for a home loan, please feel free to contact A and N Mortgage at (773) 305-LOAN (773-305-5626) to speak with one of our mortgage specialists today. We’re an established, respected Chicago mortgage company and have been listed as one of the top 100 mortgage companies two years in a row. We also have an A+ credit rating with the BBB for ten years running.
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