While the closing is the final step in the process, there are several important processes that must be completed before signing the final closing documents. These processes are essential because they are important to protecting the rights of the home buyer. The home buyer should make certain they they do the following prior to closing the loan: reserve funds for closing, hire a home inspector, search the title, obtain settlement statements, purchase home insurance, and set a move-in date. Ensuring all of these steps are completed in a timely and efficient manner will make closing the loan a simple, easy process.
Steps Critical to Closing:
Reserve Funds for Closing
Home buyers should be aware that there may be expenses they will need to pay at closing. These expenses are referred to as closing costs and includes miscellaneous fees for things such as lender processing fees, work conducted by the title company, and recording the deed. In most cases, these costs range from 2 to 6 percent of the total loan amount. Home buyers will need to pay these costs either with cash or a certified check.
Set-Up a Home Inspection
Home buyers will want to hire a home inspector to conduct a thorough and comprehensive home inspection. A home inspector will evaluate the condition of the home to ensure the home is structurally sound. A home inspector should provide the home buyer with a detailed report of his or her findings. It is preferable for home buyers to attend the inspection in order to ask questions about the property and address any potential concerns.
Conduct a Title Search
Home buyers will not have to conduct a title search on their own, but their lawyer should conduct a title search on their behalf. A title search is required in order to make certain the home buyer is purchasing the home from the legal owner and that the property has no existing liens against it. A title search can also determine if there are any overdue special assessments or other claims on the property.
Review the Settlement Statement
Reviewing documentation before signing and closing a deal is wise no matter the circumstances. When purchasing real estate, home buyers are advised to get a copy of the settlement statement and review it before closing. If there are any discrepancies in the settlement statements, these concerns can be addressed prior to the closing date.
Purchase Home Insurance
Before a home loan can be finalized, home buyers must provide their lender with proof of home insurance. A valid homeowner's insurance policy will satisfy this requirement and ensure both the home buyer's and lender's investment is protected.
Set a Move-In Date
The move-in date is the agreement between the home buyer and the seller as to when the home buyer will legally take possession of the property. This date should be in writing in order to make certain the home owner gets to move into their new home as planned.
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