Closing day is the final step in the home-buying process, where ownership of the property officially transfers from the seller to the buyer. It’s crucial to ensure that everything is in order before you sign the final documents. Here’s a detailed checklist to help you stay organized and prepared for a smooth closing day.
1. Final Walkthrough
Before you close on your new home, it’s essential to conduct a final walkthrough. This allows you to verify that the property is in the condition agreed upon and that any repairs or changes requested have been made.
- Verify Repairs: Ensure that any agreed-upon repairs or changes have been completed.
- Check Appliances: Confirm that all appliances (refrigerator, oven, washer, dryer, etc.) are still in place and functioning properly.
- Ensure the Seller Has Removed All Items: Make sure the home is free of the seller’s belongings, unless other items were included in the sale.
- Look for Damage: Check for any damage that may have occurred after the inspection, such as water leaks, cracks, or other issues.
- Inspect Systems: Ensure that the plumbing, HVAC, and electrical systems are still functioning.
2. Gather Documentation
Before heading to closing, make sure you have all the necessary documentation ready. This will ensure a smooth process and prevent any last-minute issues.
- Identification: Bring a valid government-issued ID (such as a driver’s license or passport).
- Proof of Insurance: You will need to show proof of homeowner’s insurance, which is typically required by your lender before closing.
- Closing Disclosure: Review the closing disclosure, which outlines the final costs of the loan, including interest rates, fees, and other charges. Confirm that it matches the Loan Estimate.
- Down Payment and Closing Costs: Bring a certified or cashier’s check for the down payment and closing costs, or arrange for a wire transfer to cover the amount.
- Loan Documents: If you’re using a mortgage, ensure you have all documents related to your loan approval.
- Title and Closing Documents: The title company will provide the deed and other necessary documents that transfer ownership.
- Any Other Documents Needed by Your Lender or Attorney: Check with your lender or attorney if any additional documents are required.
3. Understand the Closing Costs
On closing day, you’ll need to settle the closing costs, which can include:
- Down Payment: The portion of the home’s price that you’re paying upfront, typically 10%-20% for most buyers.
- Closing Costs: These costs can range from 2%-5% of the purchase price of the home. They include:
- Loan origination fees
- Title insurance
- Home inspection fees
- Recording fees
- Appraisal fees
- Attorney’s fees (if applicable)
- Prepaid Costs: These can include property taxes, homeowner’s insurance, and mortgage interest.
- Pro-rated Property Taxes: If the seller has already paid the taxes, they may require a refund for the portion of the year you will own the home.
Review the closing statement carefully to ensure there are no unexpected charges.
4. Review the Closing Documents
During closing, you’ll need to sign several documents to complete the transfer of ownership. Take the time to read through the following carefully:
- Deed of Trust or Mortgage: This document secures the loan to the home and provides your lender with the right to foreclose if you don’t make payments.
- Promissory Note: This outlines the terms of your loan, including the interest rate, payment schedule, and loan amount.
- Closing Disclosure: This document details the final loan terms and costs. Ensure that the numbers match what you were previously provided by your lender.
- Title Transfer Documents: These documents officially transfer ownership of the property from the seller to you.
- Certificate of Occupancy (if applicable): For newly built homes or homes that have undergone significant renovations, ensure you receive this certificate from the city or municipality indicating that the property is legally habitable.
5. Confirm Your Financing
If you’re financing the home with a mortgage, review your loan terms one last time. Double-check the loan amount, interest rate, and terms.
- Review Your Rate and Payment Schedule: Confirm that the loan terms you agreed to are reflected in the documents.
- Escrow Account: If you’re required to have an escrow account for taxes and insurance, verify the amount being placed in the account.
6. Review the Title Insurance
Title insurance protects you and your lender against potential disputes over the ownership of the property.
- Title Search: Confirm that the title company has completed a thorough title search and that no liens, legal issues, or claims exist on the property.
- Title Insurance: Make sure you’ve purchased title insurance (both lender’s and owner’s policies) to protect against potential ownership disputes.
7. Final Payment for Down Payment and Closing Costs
Ensure that you are prepared to make the required final payments:
- Certified Check or Wire Transfer: You’ll need to provide a certified check or wire transfer for the down payment and closing costs. Confirm the exact amount with your lender or title company prior to the day of closing.
8. Settle Any Last-Minute Questions
Take this opportunity to ask any remaining questions or clarify any doubts you may have with the following parties:
- Your Real Estate Agent: Confirm final details or issues related to the transaction.
- The Seller’s Agent: If there are last-minute issues or concerns about the property, address them now.
- Your Lender: Ask your lender any final questions related to the mortgage or your payment schedule.
- The Title Company: Ensure they are handling all the necessary paperwork and the transfer of the deed.
9. Sign the Closing Documents
Once everything is in order, you’ll sign the necessary documents to finalize the sale. This may include:
- Deed of Trust or Mortgage: Secures the loan against the property.
- Closing Disclosure: Finalizes the financial details.
- Promissory Note: Your commitment to repay the loan.
- Title Transfer Documents: Officially transfers ownership of the property.
Take your time to read each document before signing. If anything seems unclear, don’t hesitate to ask for clarification.
10. Receive the Keys
After signing, you will receive the keys to your new home. You are now officially the owner of the property!
- Get Copies of All Documents: Ensure you receive a copy of all signed documents, including the closing disclosure, title insurance policy, and any warranties or guarantees provided by the seller.
- Change Locks: For security, it’s a good idea to change the locks on the property once you take possession.
11. Set Up Utilities
Before moving in, contact local utility companies to set up services:
- Electricity, Gas, and Water: Confirm these are set up and ready to go on the day of your move.
- Internet and Cable: Arrange for installation if needed, ensuring a smooth transition when you move in.
- Trash and Recycling: Set up or confirm service for waste disposal.
12. Take Final Notes
Lastly, take a final walkthrough of the property one more time to ensure it’s in the condition you expected.
- Verify All Items Are Included: Ensure that the items included in the sale (appliances, fixtures, etc.) are in the property.
- Check the Condition of the Property: Ensure that the property is in the agreed-upon condition and any outstanding items from the inspection have been addressed.
Conclusion
Closing day marks the culmination of the home-buying process, and it’s essential to stay organized and informed to ensure everything goes smoothly. By following this checklist, you’ll be fully prepared for the big day and confident in your new home. Congratulations on reaching this milestone!