Buying a home can be a complicated and daunting process, especially if you are a first-time homebuyer. The transaction involves numerous steps that must be completed by specific deadlines for the deal to go through. Even if you're working with a real estate agent, knowing what you have to do and when to do it could reduce your stress on closing day.
Buy Homeowner's Insurance
Your lender will require you to insure your house against damage and destruction. A few days before closing, your loan officer will send you a final loan approval letter, which you need in hand for an insurance agent to draw up a homeowner's insurance policy. At closing, you'll be required to deposit at least one year's worth of insurance premiums in escrow that the lender will use to pay the policy when the bill comes due. You can shop for and purchase a homeowner's insurance policy quickly and efficiently online or on the phone. If you're buying your house in cash, you still should purchase homeowner's insurance before closing.
Acquire Certified Funds
Closing agents only accept certified funds. In most cases, you'll need a cashier's check from your bank to cover your closing costs, which include, but are not limited to, fees for the house appraisal, title search and document preparation. In some cases, you might be able to arrange a wire transfer from your bank account to the closing agent's account. If your closing takes place early in the morning, get a cashier's check from the bank the day before. The closing agent or your real estate agent can give you a copy of the closing statement, known as the HUD-1, detailing how much you owe at the closing table.
Attend the Walk-Through
As a homebuyer, you have a right to inspect the property one more time before closing. The walk-through provides an opportunity to check that the home inspection items were repaired by the seller and that the items he agreed to leave -- such as the appliances -- are still in place. Your agent will have a walk-through checklist for you to sign once you've inspected the property. The walk-through usually takes place the day of closing, but it can take place the night before if you have an early morning closing date.
Unforeseen circumstances could cause delays, even when you do everything you're supposed to do as a buyer to ensure a smooth closing. For example, a short-staffed lender might cause your final loan approval to be delayed until minutes before closing, which could delay purchasing a homeowner's insurance policy. Also, if the seller isn't able to make the repairs agreed upon in the contract or removes an item that should remain in the home, you or your agent may have to negotiate compensation at the closing table.
- Why Realty: Preparing for the Closing
- Jersey Mortgage Company: Typical Closing Costs Associated With Mortgages
- Bankrate: How to Do House Walk-Through Before Closing
- ClosingCorp. "ClosingCorp Reports Average Mortgage Closing Cost Data for 2019," Pages 1, 3, and 4. Accessed August 15, 2020.
- U.S. Congress. "12 USC Ch. 27: Real Estate Settlement Procedures." Accessed August 15, 2020.
- U.S. Department of Housing and Urban Development. "Mortgage Insurance Premiums," Page 1. Accessed August 15, 2020.
- Consumer Financial Protection Bureau. "What Is Private Mortgage Insurance?" Accessed August 15, 2020.
Maya Black has been covering business, food, travel, cultural topics and decorating since 1992. She has bachelor's degree in art and a master's degree in cultural studies from University of Texas, a culinary arts certificate and a real estate license. Her articles appear in magazines such as Virginia Living and Albemarle.