Tips for a Stress-Free Closing

Tips for a Stress-Free Closing

Congratulations!  Your home purchase offer has been accepted, financing is underway, and you have a buyer’s agent you trust to oversee the myriad details that stand between you and your new amazing home. Time to sit back and relax?

Not so fast. Between falling in love with your new home and signing the final papers, there’s still lots that can go wrong for a would-be home buyer – things that only you, the home buyer, can control.

So, here are some tips to prevent a good closing from going bad:

Be credit score savvy! Don’t start buying furniture for your new home or a new car, or even take out a loan (or co-sign a loan) for any reason, including education. Keep your credit card situation as it was when you applied for the home mortgage loan. Basically, you don’t want to do anything that might change your credit status – including checking your credit, because that will add inquiries to your rating, which can lower the score.

Don’t move large amounts of money before the closing date, for example, transferring money out of savings into checking in anticipation of closing. Large transfers will trigger paper trail questions, and the necessary paperwork that is then required can fall through the cracks. In general, leave funds where they are and secure a bank check for closing. Alternatively, arrange a wire or bank transfer of funds to reach the escrow company early. If you don't know the exact amount needed at closing, have more than enough money transferred. You'll get a refund later.

Get your ducks in a row – or paperwork, that is! Be prompt when delivering documents or information to the lender. Lenders cannot submit the file for underwriting until everything they need is collected. And, lenders are notorious for asking for information at the last minute – copies of rental agreements, cancelled checks, etc., so talk to your loan officer well in advance. Ask:” Is there anything else you need to complete the file?”

Also, banks and underwriters can and do lose paperwork. Have copies of what you have already given interested parties ready to fax to them if something gets lost (make sure you don’t pack them for moving!) Be sure to take all these documents with you to closing as well.

Be proactive to avoid settlement statement shock, which can stall the closing process.

Ask to see every piece of paperwork as far in advance as possible. All parties involved should review the standard form that itemizes fees and other closing costs before the actual close. Failure to do this can stall the process. Any changes requested by the buyer must be reapproved by the lender.

Pay particular attention to loan documents. Double-check loan and down payment amounts, interest rates, spelling and all personal information. Question anything you don't understand or that seems odd.

Buyers should be in constant contact with the loan officer to be sure the lender has everything they need to approve the loan. To ensure this, tell the lender you want to review the documents before closing. (By law, you have the right to review the closing settlement statement, or the HUD-1 form, at least 24 hours prior to closing. Compare that form to the good faith estimate, or the GFE form, you received when you applied for the loan.)

Be available to jump on issues during the final walk-through. Be sure to monitor post-inspection repairs yourself. But things can also happen during the moving out process: The seller might knock a hole in the wall, forget to remove trash, or break a lighting fixture. If something isn’t right during the final walk-through, bring it to the attention of your agent, who will work with the seller’s agent and seller to resolve any issues. Together, figure out what’s acceptable and how the seller will pay make restitution. (You might negotiate a credit on your closing fees, meaning the seller pays more at closing, or have the appropriate amount from the seller’s proceeds placed in escrow until the problems are fixed.)

Don’t wait until closing to bring up the issues. Get them fixed beforehand. If that’s not possible, postpone the closing while you work it out. But remember, your lender's loan commitment has an expiration date, as does the day by which the escrow must be closed.

Expect the unexpected. Advance homework is your best defense against last-minute title surprises. You need to carefully review the preliminary title report completed shortly after escrow opened. Often, the report goes directly to the lender, so arrange to receive your own copy.

At closing you'll buy title insurance to protect yourself in case the title company missed anything in its search, but that policy is only effective from the day of closing forward.

Be sure to check the numbers on the mortgage note you are signing, even if you have been given the HUD-1 form prior to closing. Typos aren’t unheard of – and innocent typos (like an incorrect interest rate) can ruin the closing.

To prepare for these unexpected delays, borrowers should try to schedule their closings for earlier in the day. Don't wait until the last day on the contract to close.

Be on time and don’t hurry the process!

One of the very best things you can do is make sure you, and everyone else involved in closing, arrives on time. And, if possible, do yourself a favor and take the entire day off. Don’t expect to conduct the closing over your lunch hour!

If a sale fails to close, the fate of the buyer's earnest money is dictated by the wording of the sales contract or the reasons for the failure. You may need to consult an attorney.

What to bring to closing:

• 1 photo ID. (Some escrow officers even suggest you have two photo IDs.)

• copies of the homeowners insurance policy, mortgage insurance, and flood certification

• GFE form and/or the HUD-1 statement (or both, in case there are discrepancies).

• Proof of title search and insurance

• Home appraisal and inspection reports (needed only if those costs are being paid through escrow)

• Bank check to cover closing costs