So, you’re a first-time home buyer approaching the finish line to your new home. What could go wrong? What things are needed before finishing the closing process?
Read more to learn about the final action points in those few days leading up to settlement.
Square away all contingencies
The first step on your house closing checklist should be to get all contingencies squared away.
Most purchase agreements have contingencies – things that buyers must do before the real estate transaction is final. The most common contingencies include:
- Home inspection contingency: This gives the buyer the right to have the home professionally inspected. If something is broken, you can request that it be fixed or back out of the sale.
- Appraisal contingency: This allows a third party hired by your mortgage lender to evaluate the value of your home. If the appraised value is less than the sale price, the contingency enables you to back out of the deal.
- Financing Contingency: This gives you the right to back out of the deal if your mortgage approval falls through.
Clear the title
To establish legal ownership when purchasing a home, you “take title” to the property. As a part of the closing process, a title search will be ordered, and you’ll need to purchase title insurance.
This will protect you from legal claims to the house. Sometimes distance acquaintances may surface with a claim that they own the home.
A clear title ensures that the home is yours and you have all rights and ownership of the property.
Final mortgage approval
You’ve already made the down payment. But before you can go to the closing table, your home loan must go through the underwriting process.
Underwriters will check your credit score, review your home appraisal, and ensure that your financial portfolio has remained the same since you were pre-approved for the loan.
Since this happens right before closing, don’t do anything to jeopardize it. This includes making a down payment on a car, boat, or similar large purchase that must be financed.
Review closing disclosure
Review your closing disclosure. This document outlines your exact mortgage payments, the loan’s terms, and additional fees you’ll pay, called closing costs.
Compare this to the loan estimate your lender gave you in the beginning. If you spot any discrepancies, ask your lender to explain them.
Most sales contracts allow a final walk-through of the property. This is typically done 24 hours before closing.
During this walk-through, you’re making sure that the previous owners have vacated, and the house is in the agreed-upon condition.
Bring important documentation to closing
This is the most important item on a home closing checklist. Make sure you have the following items when you head to the closing table:
- Proof of homeowners insurance
- A copy of the contract with the seller
- Home inspection reports
- Any paperwork required by the bank for loan approval
- A government-issued photo ID
Be prepared to sign a lot of paperwork. A settlement agent will guide you through the process.
When you’re done, collect the keys, and you’re finally a homeowner!