You've done it. You've found your dream home, made an offer and they've accepted! But before you can grab the keys and start moving in, you've still got a lot of work to do - namely, arranging home financing, signing paperwork and waiting for the purchase contract to go through. Yes, closing on a real estate deal can take time - and when unexpected hiccups arise, it can be incredibly frustrating.
Here are some tips to help you avoid the headaches of closing and ensure that the process goes as smoothly as possible:
1. Review the closing documents 24 hours prior to closing. Often, new home buyers rush through the paperwork signing process, and understandably so. Pages upon pages upon pages of real estate legalese would make just about anyone's eyes glaze over. And besides, it's hard to absorb all that information when you're excited or stressed about your big move. But as tempting as it is to skim through these documents, you should avoid doing so by giving yourself a reasonable amount of time to read them.
Naturally, when it comes to making a real estate transaction, time is of the essence. (This is something you'll probably hear your agent say on multiple occasions). There are certain documents you may not want to sit on, namely paperwork that your bank needs to approve your loan. However, there are other documents that you should view well in advance, such as the HUD-1 settlement statement, which allows anyone involved in the transaction to review required costs and fees.
2. Use a certified check instead of a personal one. By bringing a certified check to closing, you could shave as much as two weeks off your closing process. Direct wire transfers are another option that can make the deal go through much faster. Your best bet is to ask your escrow company which form of payment they prefer or require. (If you're not sure who your escrow company is, ask your lawyer or real estate agent).
3. Get your insurance squared away early. Experts say you should obtain homeowners insurance the same day that you open your escrow account. Also, you should communicate with your escrow officer to make sure they have the necessary documentation or contact information for your policy. The last thing you want is there to be a miscommunication when it comes to insurance.
Note that your insurance policy will not go into effect until closing, so you should not have to pay for coverage in advance just because you arrange for the policy early. If, for some reason, your policy needs to be altered after closing (adding coverage, rewording the language, etc.) you can work with the company to revise the necessary documents. By having your insurance in place in advance, you could save anywhere from 4 to seven days on your closing timeframe.
4. Respond to phone calls promptly. There will be a lot of communication back and forth between you, your real estate agent, your lender and your broker in the weeks leading up to closing. Don't hold up progress by being slow to respond to voicemails and missed calls. And, just to be on the safe side, you should probably bring your cell phone charger or car charger with you when you leave home for an extended period.
5. Be specific if you allot time for repairs. It's fairly common for buyers to request certain repairs before they will take possession of the property. A door may need to be painted, carpet may need to be professionally cleaned, a leaky faucet may need fixing, and so on. Instead of just making a list of desired repairs, work with the sellers and/or their agent to develop a specific timeframe. If everybody's on the same page when it comes to scheduling, it could spare you a lot of hassle later on. Another option is for the sellers to place the funds required for the repairs in escrow and then you can make arrangements to have them completed after you take possession of the property. You run the risk that the agreed upon amount might not fully cover the cost of the work, but it will allow you to move more quickly.
As a final word of advice when it comes to closing on a home, listen to the instructions given to you by your agent, mortgage representative, lending consultant, attorney, etc. Whoever it is you're working with to close this deal should be an expert in the field, so take their instructions seriously and if you do not understand something - speak up. Real estate transactions are major purchases and involve a lot of legal obligations. You do not want to enter into a home purchase without being aware and prepared for what the process entails.