Closing day—you’ve been waiting for this day for months now. Now, you’re ready to sign on that dotted line and become the official property owner. Closing day can seem daunting at first, but really there are just a few steps between you and a smooth closing experience, from picking the right date to giving them the old John Hancock and getting the deed in your name.
Step 1: Make it a date.
Once your offer is accepted and a purchase agreement has been made, a closing date is set. It’s recommended to schedule your closing at least 30 days after the offer has been accepted, just to allow some time to gather all the necessary paperwork and get all your ducks in a row. But don’t wait too long. You want to choose a closing date that’s well before the lender’s loan commitment expires so you can take advantage of the interest rate you were promised.
Step 2: Schedule a final walkthrough.
This isn’t a home inspection! By now, you should have already completed a home inspection with the right home inspection professional. The final walkthrough is scheduled by your real estate agent to make sure the property exactly matches what’s in your real estate contract . This is your last chance to point out anything you’re unhappy with—and anything that’s different from what’s on the contract, even down to the furniture. A thorough home inspection is something you don’t want to rush. Forbes has a comprehensive list of what you should check during a final walkthrough—and yes, it includes flushing the toilets.
Step 3: Make out a certified or cashier’s check.
On closing day, you’ll need to pay the down payment (the amount not financed by your lender) as well as any closing costs, which are, on average about 3-5% of the property’s purchase price1. Your lender will send you a Closing Disclosure with the final terms and figures including the closing costs, so there’ll be no guesswork. You’ll need to bring a certified check or a cashier’s check made payable to the title or closing company. Your lender will provide a lender’s check for the amount they’re financing. Be sure to doublecheck this amount against your original Loan Estimate to make sure everything lines up.
Step 4: Gather some documents.
Aside from covering down payment and closing costs, you’ll need to have some important documents on hand. For the most part, these will include proof of identification such as a valid driver’s license or passport, and proof of homeowner’s insurance as well as any other insurance policies you may have, including windstorm and flood insurance. Not having any of these documents come closing day can potentially delay the entire process, so make sure you make a list and check it twice.
Step 5: Prepare for paperwork.
Be ready to sign a lot of paperwork on closing day. This is because you’re actually closing on two things—your loan and the purchase of the property. Although the amount of actual forms will vary depending on the type of property and location, you can expect at least 24 forms for the loan and another 12 or so for the real estate part. Some closing day forms you’ll encounter include the Promissory Note, Truth in Lending Statement and Purchase Agreement, among many others. Although it can be overwhelming, it’s important to take your time to carefully review each document and ask questions so you’re confident in your decision.
Step 6: Time for the John Hancock.
If you’re trying to perfect your signature, you’ll get plenty of practice on closing day! Signing on that dotted line is what makes each document legally binding, and there will be lots to sign. We won’t go over the specific documents you’ll sign in this article, but they will probably include a settlement statement that lists all the costs, a mortgage note stating your promise to repay the loan, and a mortgage or deed. After all the autographs, a title company will then register the new deed of the property in your name.
Although closing day can seem so distant when you first make an offer on a property, knowing the steps to a smooth closing can help you envision it and take some of the stress out of the property buying process. Nail these steps and you’ll soon be ready to move in or start those renovations!