Buying a home is exciting, but it can also be a bit overwhelming. There are many things to do in the days that lead up to a closing, so it is best to have a clearly outlined plan of action to make sure nothing is missed. Here is a list of important points for homebuyers who are going to be closing on a new home.
Ensure the Title is Clear
When someone buys a home, they take over the title of a property and establish legal ownership of the property. This process is confirmed through local public land records. During the process of closing on a home, the mortgage lender requires what is referred to as a title search and a homebuyer will need to buy title insurance to protect themselves from any possible legal claims on the home. At times, a relative of the seller may make a claim to a home that is being sold, saying that the seller does not have the right to sell the home. The clearing of title ensures that something like this does not happen. A homebuyer is entitled to choose the title company. Asking the real estate professional that is guiding the homebuyer through the purchase for suggestions as to which title company to use may be a great point of reference. A homebuyer could also ask the mortgage lender or friends for their suggestions as to which title company to use for the clearing of title on the home.
Most home purchase contracts have items that the buyers have to take care of before the transaction is final; these items are referred to as contingencies. Some may include a home inspection, which gives the homebuyer a right to have the home inspected by a professional inspector and a third-party appraisal; a third party is hired by the lender to evaluate the true fair market value of the home. If a home appraisal is less than the sale price, this contingency allows a buyer to back out of a purchase without losing a deposit. Another type of contingency is a financing contingency, which gives a buyer the right to exit a deal if the mortgage approval does not come to fruition.
Prior to going to closing, any financing has to have proceeded through the underwriting stages. Underwriters ensure all of the information provided by a borrower is accurate and truthful. Underwriters work for lenders and are responsible for several tasks, including checking a borrowers credit score, review the appraisal for the home that is being purchased, and making sure that the borrower’s finances have remained intact from the time the borrower was pre-approved to the time of closing. It is wise to stay away from anything that could possibly affect the purchase of a home during the underwriting process. This could include making a purchase that is considered large in size, such as that of a vehicle.
Review the HUD Statement
When financing a home, it is important to completely review the HUD statement, also referred to as a closing disclosure statement. This statement offers a complete outline of the mortgage payments, terms of the loan, and any additional fees the homebuyer is responsible for (closing costs). A homebuyer should check the closing statement against any loan estimate that was previously provided to the homebuyer by the lender.
Final Walk-Through of the Home
Most buyers are permitted by contract to do a final walk-through of the home they are purchasing within the twenty-four hours prior to closing. During this time, the homebuyer can make sure the seller has removed all of their belongings from the property. It is important for the buyer to also make sure the home is in the same condition that it was in when the contract was signed. If issues were discovered during the home inspection process and the seller said they would repair or otherwise resolve those issues, the final walk-through is when a buyer would check to make sure those issues have in fact been resolved.
Collect Needed Documentation
A buyer is required to bring several documents to closing. Those documents include: proof of homeowners insurance, a copy of the contract that was entered into with the seller, any home inspection reports, any paperwork that the lender has required the buyer to bring in order to approve the loan, and government-issued identification.
Buyers should be prepared to spend some time with a real estate attorney or a settlement agent, having documents explained to them and signing all the necessary documents to complete the purchase. As a buyer, your real estate agent will also be very helpful during this process too, so be sure to ask them questions as needed. Though the process can be long, it does not have to be arduous and can be a positive experience!