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Exploring Your Mortgage Options
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Exploring Your Mortgage Options
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Exploring Your Mortgage Options
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1. WHAT HAPPENS IN THE DAYS BEFORE CLOSING
So, you’ve just found a home that meets all your needs, you’re ready to buy a house and made a good offer that’s been accepted and you’ve also been approved for the loan. The only thing left now is signing on the dotted line. This is also known as the closing, where you’ll be signing on all the mortgage paperwork, and take possession of the property. So, here’s everything you should know about closing:
ACKNOWLEDGE YOUR CLOSING DISCLOSURE
A Closing Disclosure is a document you’ll be given before your closing, which will include the summarized final costs of the loan.
Your lender is legally required to give you the Closing Disclosure 3 business days before the closing. You must acknowledge that you’ve received this document as soon as possible; otherwise, your closing will be delayed.
HOW MUCH CAN COSTS CHANGE BETWEEN THE CLOSING DISCLOSURE AND THE LOAN ESTIMATE?
The costs that are outlined in the Closing Disclosure must be within 10% of the estimates that have been provided to you in the Loan Estimate.
ATTEND A FINAL WALK-THROUGH
In several cases, you’ll go through a walk-through inspection of the property at least 1 day before the closing, to ensure that everything is in the proper order. This is done to ensure that the property is in the condition that was mentioned in the purchase agreement. When you’re taking one last look at the property, here are some of the questions you should ask:
- Have all the agreed-upon repairs been completed?
- Have the sellers left behind all window treatments, appliances, etc., which were mentioned in the purchase agreement? Is the condition of the items what you expected?
- Has the property been damaged by the sellers in the moving out process?
- Do all the lights and faucets work?
- Is the garage door opening?
- Have the sellers removed all hazardous materials, like construction materials and old paint cans?
If you experience any major problems, you may contact the listing agent for negotiating a fair solution or delay the closing.
2. WHAT AND WHO TO BRING TO CLOSING?
WHAT YOU SHOULD BRING
Here are some of the items you should be bringing with you to the closing:
- A valid, government-issued photo ID or your driver’s license.
- A proof of wire transfer or cashier’s check for paying your closing costs and down payment.
- Your Closing Disclosure to compare to the final paperwork.
- A list of all key contacts, like your lawyer or agent to answer any questions you may have
WHO SHOULD ATTEND?
As a rule, all buyers who’re going to be on the loan must be at the closing. Closing can still be done if you’re not present there, but you’ll need to give power of attorney to someone.
In most states, the seller and buyer will be present at the closing. However, in other states, every party will be attending a separate closing. So, you may see the seller at the closing but it’s not guaranteed.
You may expect to see a closing agent, who’ll help with the closing. They will be a neutral third-party who will help both seller and buyer during the process. Your real estate agent may attend as well, but it isn’t necessary that they attend.
3. WHAT YOU’LL PAY FOR AT CLOSING?
You’ll need to pay all closing costs and will be given the keys to your home at the closing. We’re going to breakdown some of the most common upfront costs you’ll face:
DOWN PAYMENT
Your down payment is going to become the equity you have in the home.
ESCROW FUNDS
Your lender is going to be collecting these funds at the closing to make sure that there is going to be enough money left in your account to pay for taxes and insurance bills when they become due.
THIRD-PARTY FEES
This will cover the costs from third-parties that your lender uses for processing your loan. These fees are going to include title insurance costs, credit report fees, and appraisal fees.
PER-DIEM INTEREST
You must pay daily interest upfront for covering the period between the date your first mortgage payment was due and the closing.
HOME OWNER’S ASSOCIATION (HOA) DUES
You may need to pay an entire year’s dues at closing if you’re moving to a place that has HOA dues.
DISCOUNT POINTS
A (discount point) or point is a fee that is paid to bring down your interest rate. If you’ve selected to pay points, you’ll be paying them at closing.
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Further Reading
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