10 Steps to a Smooth Closing, from a guy who been to thousands!
You have waited 30, maybe 60 days for your closing to finally come. Here are some helpful hints to follow that may prevent the closing from becoming a nightmare. Whether you are the seller, buyer or simply refinancing a current mortgage, the actual closing can be quite simple or become a total nightmare. Below are ten helpful hints, in no particular order, that if followed, may prevent the closing from becoming a terrible experience.
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1) Arrange and perform a pre-closing interview with both the Loan Officer and Title Closing Agent. This will ensure that both parties have identical information regarding the transaction. It is extremely important to speak to them several days before closing.
HINT: DO NOT TAKE FINAL NUMBER INFORMATION FROM YOUR REALTOR (sorry Realtors). While they "may" have received some "final" numbers, they are NOT the official correct source of final number information. They usually get their initial information from the Title Closer BEFORE that information has been reviewed, verified, and possibly corrected by the lender. They may or may not have the most current updated and accurate information. I can not tell you how many times I've received initial numbers, found errors or descrepencies, had them corrected, then contacted the buyer only to have them tell me the Realtor already gave them the inital wrong number. From my experience, maybe 50% of initial numbers are wrong.
If you are the buyer or borrower, verify the loan amount, interest rate of the loan and the amount financed with your Loan officer. Make sure that both parties have the correct spelling of all borrowers and their spouses legal names. Also verify the sales price and amount of deposit that you paid if the transaction is for the purchase of a home.
If you are the seller in a sales transaction, make sure that the sales price and the amount of the deposit being held in escrow are correct. Be sure to verify the correct spelling of the names of all people that are in title to the property.
2) If you intend on having a third-party (i.e.- attorney or relative) review the closing papers, make sure that both the Loan Processor and Closing Agent are aware of it several days prior to closing. They will need the name, address and phone number of the people that need to review the documents. Many of the closing documents are extremely date-sensitive and must be signed on the scheduled day of closing. If the Closing Agent and Processor are not aware of your request, they cannot plan accordingly. This may cause some documents to become invalid and would require another closing at a later date.
3) Know where the closing is going to be held. Possibilities include the title insurance company or Closing Agent, attorney’s office, one of the Realtor’s offices and the mortgage company’s office. Standard procedures vary between states and sometimes local areas. Make sure you know which applies to your transaction at least 24 hours prior to closing. The Closing Agent is the best person to speak with. You may be surprised how often the other parties do not communicate well and will assume the wrong answer.
4) Every borrower has the right to a private closing. This means that many of the papers you may sign can be executed without the seller and/or Realtor(s) in the room with you. In most cases, the terms of your financing are not relevant to the other people of the transaction and need not be seen by these third parties. If you intend on invoking this right, be sure to inform the Closing Agent several days prior to closing. This will allow them time to make proper arrangements in their office.
5) Try to avoid closing at the end of the month. The last week of every month, is extremely busy for both the Closing Agent and your mortgage lender. There is a larger possibility that an error may be made during this time. You may also find the Closing Agent much more relaxed and personable if she doesn’t have 8 other closings scheduled the same day as yours. Anytime between the 4th and 24th of the month are good days to close. Many people incorrectly assume you save a lot of money closing on the last days of the month, and most real estate agents automatically write into your purchase agreement a closing the last few days of the month. Call me, I'll explain why this isn't true, and why they are making incorrect assumptions.
6) Make sure that the Closing Agent is aware of any typos that may have been discovered during the application process. If you are the seller, this applies to any past closings that may have caused documents to be recorded in public records with incorrect names or addresses. The documents that are presented for signing at closing are prepared by at least two different sources. There is a possibility that if you corrected an error with the mortgage company, it was not forwarded to the title insurance company and vice-versa. Informing the Closing Agent will allow them to check all of the documents for accuracy before they are presented to you for signing.
7) Identification. Be sure that every borrower and seller bring a valid drivers license or other picture ID to closing. This is required for notary purposes.
8) If you are the seller of a purchase transaction or the borrower of a refinance transaction, make sure the Closing Agent knows when your last payment was made on your current mortgage(s). Your lender or Closing Agent may request a payoff statement from your current lender(s) before your latest payment is posted to your account. This will make the payoff figures used for the closing inaccurate and would result in your current mortgage company owing you money after they have been paid-off, or you still owing them after you thought you had paid it off.
9) Any funds that are needed for closing, whether you are the seller, buyer or borrower, must be in the form of guaranteed funds. Personal check or Cash is not acceptable! You will need to go to the bank and get a Cashier’s Check or wire the funds directly to the Closing Agent. A general rule of thumb is this: If the instrument requires your signature, it is probably not acceptable for the closing. In many states, even a Certified Check is not acceptable. Important: Have the Cashier’s Check made payable to yourself. This allows you to deposit the check back into your own account if a problem arises at closing and the transaction is not completed.
10) Try to schedule your closing time no earlier than late-morning (11:00 or later). This will allow time for overnight mail carriers to make their deliveries, which may include your closing papers, and will allow you to miss rush-hour traffic driving to the closing. It also allows you time to get to the bank and get your Cashier’s Check if you have not done so yet.
CONGRATULATIONS, you are now a home owner!
Copyright © 2010 by Joe Metzler, Mortgages Unlimited, Saint Paul, MN
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If you have questions about the process for homes in MN or WI ONLY, please call 651-705-6261, or APPLY ONLINE 24-hours a day via our secure application. There are no costs or obligations.
Joe Metzler is a Certified MN Mortgage Specialist (MMS). He and his team at Mortgages Unlimited are proud to provide home mortgages loans for First time home buyers in Minnesota and Wisconsin.
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