June 17th, 2018 8:22 AM by Jackie A. Graves
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or Buy a Home
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Details matter, especially when
it comes to the all-important Loan Estimate and Closing Disclosure.
After all of the components of
the home buying process — negotiations, appraisals, inspections, and insurance
— it’s very exciting to (finally) get to closing. But do you know what really
happens during this final appointment? Closing on a home can be nerve-racking
simply because many first-time buyers don’t know what to expect or what
to bring along.
Here, we’ll walk through all
the details of what to expect at closing.
Scheduling & Closing
The date of closing is
typically set in the offer letter as most sellers will want to know when they
can expect the closed sale once the home is under contract. Typically, closing
is set 30 to 60 days from when offer is accepted, although this can change depending
upon a variety of factors, including inspections and paperwork processing with
Depending on the state you live
in, closing may take place at the closing attorney’s office or the title
company. It’s the buyer’s right to choose the closing attorney. This person
acts in the interest of the buyer and takes care of the “housekeeping” items of
the closing, such as preparing paperwork, making sure all paperwork is properly
signed, conducting a title check on the property, and receipt and distribution
of money, among other things. The fee for the closing attorney is often
included in the closing costs.
If you’re buying a home with an
FHA loan, a mortgage loan option backed by the Federal Housing Administration
that allows home buyers to put as little as 3.5% down, many lenders may
recommend one of their pre-approved attorneys. If you (as the buyer) don’t have
an attorney, the lender can also choose one for you, but you’re not required to
use that recommendation.
Paperwork You’ll Receive
There are two pieces of
paperwork home buying consumers should familiarize themselves with: the Loan
Estimate and the Closing Disclosure. Both of these tools explain the loan
terms, like interest rate and other costs associated with the loan (taxes,
recording fees, etc.). The Loan Estimate should be provided to you no more than
three days after your loan application. Keep the estimate in a safe place to
compare with your Closing Disclosure and check for any discrepancies.
No later than three days before
closing, your lender must provide you with a Closing Disclosure, which will
look very similar to your Loan Estimate. Double check the interest rate
information, address, and all other relevant information for accuracy. If
something appears different than what you thought, reach out to your mortgage
broker or lender for clarification.
The Closing Disclosure will
detail information about your mortgage loan and the exact amount you’ll need to
bring to closing to cover closing costs.
On the day of closing, you’ll
receive the following paperwork:
What to Bring
Common Mistakes to Avoid
Given the length of time
between contract and closing, most closings should be fairly routine and go
smoothly because all of the legwork has been done prior to this date (such as
checking the title, inspecting the home, loan underwriting with the lender,
etc.) Unfortunately, hiccups can happen, which is why it’s best to avoid the
common mistakes below:
Don’t skip the final walk-thru. Buyers
should do this to ensure no new damage has been made to the home shortly before
closing. If buyers opt not to do this, they cannot hold seller responsible for
damages after transfer of property at closing.
Don’t make any big financial
purchases in between contract and closing. The bank loaning
the money for the mortgage has financed the home based on the most current
financial information available. If you finance a car, an appliance, or any
other big purchase, this affects your financial information and can delay closing
on the home significantly. Unless it is the most dire of circumstances, hold
off on big purchases to get into your first home as quickly as possible
Don’t skim the closing documents. You want to check for typos on names and addresses.
Armed with the information
above, first-time buyers should feel comfortable going into their first
closing. Once the closing is over, you should receive keys (unless otherwise
negotiated with the seller) and you’re officially the owner of your new home!
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