June 13th, 2016 6:49 AM by Jackie A. Graves, President
to a smooth closing on a house is doing everything you can to eliminate the
element of surprise. Like getting approved for a mortgage before you shop for a
"Getting the mortgage approval first is a good way to check
yourself and make sure you're making a good decision," said Bill Banfield,
a vice president at Quicken Loans in Detroit. "You'll know exactly what
you can afford." You will also help ensure you haven't underestimated how
much down payment money you'll need to close.
Now, let's fast forward. You've received your mortgage commitment
(i.e., your loan application was approved), your offer was accepted, and you
have a signed contract for your dream home. Here's what to expect – and how to
minimize the unexpected – on the complicated, confusing, and sometimes
mysterious path to closing (a.k.a settlement) on your home.
You have to satisfy any
and all of the conditions that came with the mortgage commitment, like
providing bank records or tax returns. Other conditions, such as a satisfactory appraisal, title search or surveys,
are handled by other parties. Either way, you can't close and the mortgage is
not a done deal until all conditions are satisfied.
Choose an insurance company and buy a homeowner's policy covering
your future home. "Nail down who you're going to use at least a week to 10
days prior to closing so we can get definitive insurance quotes to include in
the final closing disclosure," said Steve Chaney, a loan originator with
U.S. Mortgage of Florida. According to Chaney, waiting "holds up a lot of
closings, because if the buyers are shopping around and we're three days from
closing, we can't complete the final closing disclosure."
Review the Closing Disclosure. The old HUD-1
and final Truth-in-Lending forms have been replaced by the Closing Disclosure
form from the Consumer Financial Protection Bureau. The Closing Disclosure must
be sent to you three business days before the consummation of the loan. Review
it carefully for errors and be sure to have any errors fixed.
Choose a closing agent. That may be an attorney or title company,
depending on where you live.
Ask your closing agent for an estimate on how much money is needed
to close – this will cover funds needed for down payments, escrows, other fees
Ask your lender how long
they need to wire your funds to the closing agent's account. Initiate the wire
in plenty of time. Be wary of emails or phone calls instructing you to send
money to an unfamiliar account. Confirm instructions with your real estate
and/or closing agent to avoid settlement fraud.
actual closing takes place in two parts.
During the mortgage closing, the buyer signs all the papers for
the lender and becomes obligated for the loan.
During the title closing, title is transferred from seller to
buyer. A closing involves a flurry of paperwork and can be intimidating for a
While the closing process may seem daunting, it can go smoothly if
you prepare, read everything and don't hesitate to ask questions.
this series just in time for the spring homebuying
A. Friedman - To view the original article click here