Do you have your Home Closing Checklist? It’s a rundown of everything home buyers need to do in that crucial 11th hour before they get their hands on those keys.
Because when you’re approaching the finish line in your home-buying journey, you want nothing to go wrong, right?
That’s why we’ve asked Daniel Bortz to help us put together a home closing checklist, which outlines your action points in those few days leading up to settlement. Keep this list handy to know you’ve done what you need to in order to close on your newest dream home.
1. Fulfill Home Closing Contingencies
Most purchase agreements have contingencies—contractual obligations or options that buyers must do before this transaction is official. These are the most common contingencies:
- Home inspection contingency: This gives buyers the right to have the home professionally inspected. If something is wrong, you can request it be fixed or you can back out of the sale. It’s rarely advisable to waive an inspection contingency. Why would you give up the right to walk away if you find something in that inspection? Although the average home inspection costs $300 to $500, it’s a drop in the bucket considering the costly home issues you might uncover.
- Appraisal contingency: With this contingency, a third party hired by your mortgage lender evaluates the fair market value of the home. If the appraised value is less than the sale price, the contingency enables you to back out of the deal without forfeiting your earnest money deposit. Most of the time sellers and buyers will reach an agreement on reducing the sale price or bringing more money to the table.
- Financing contingency: This contingency gives you the right to back out of the deal if your mortgage approval falls through. You have a specified time period, as stated in the sales contract, during which you have to obtain a loan that will cover the mortgage. This can happen if you lost your job or had some other financial circumstance that prohibits you from buying the home. Most often, if one mortgage lender can’t do it, another will.
2. Ensure a Clear & Clean Title
When you buy a home, you “take title” to the property and establish legal ownership—a process that’s confirmed by local public land records. As part of the closing process, your mortgage lender will require a title search, and you’ll need to purchase title insurance to protect you from legal claims to the house.
Sometimes distant relatives—or an ex-spouse—may surface with a claim that they actually own the home, and that the seller had no right to sell it to you in the first place. But clearing title will ensure this doesn’t happen.
As the home buyer, you’re entitled to choose the title company.
You can get recommendations from your real estate agent, mortgage lender, and friends—you can check the license and reputation of each company online. Wissel Homes has a short list of experienced and well regarded title companies to refer you to if needed.
3. Get Final Mortgage Approval
Before you can go to the closing table, your home loan must go through the underwriting process. Underwriters are like real estate detectives—it’s their job to make sure you have represented yourself and your finances truthfully, and that you haven’t made any false or misleading claims on your loan application.
The underwriter—employed by your mortgage lender—will check your credit score, review your home appraisal, and ensure your financial portfolio has remained the same since you were pre-approved for the loan.
Since underwriting typically happens shortly before closing, you don’t want to do anything while you’re in contract that’s going to hurt your credit score. That includes buying a car, boat, or any other large purchase that has to be financed.
4. Review Your Home Closing Disclosure
If you’re getting a loan, you need to thoroughly review your closing disclosure, also known as a CD (Closing Disclosure) settlement statement. This official document outlines your exact mortgage payments, the loan’s terms (e.g., the interest rate and duration), and additional fees you’ll pay, called closing costs (which total anywhere from 2% to 7% of your home’s price). You are required to have this three business days before your settlement in the state of Maryland.
You’ll want to compare your closing disclosure to the loan estimate your lender gave you at the outset. If you spot any discrepancies, ask your lender to explain them. If your lender was using estimates instead of exact numbers for taxes and costs, the number could be significantly different.
5. Final Walk-Through Before Home Closing
Most sales contracts allow buyers to do a walk-through of the home within 24 hours before closing. During this stage, you’re making sure the previous owner has vacated (unless you’ve allowed a rent-back arrangement in which they can stick around for a period of time before moving). You’re also double-checking that the home is in the same condition agreed upon in the contract. If your home inspection revealed problems that the sellers had agreed to fix, you’ll want to make sure those repairs were made.
6. Bring Necessary Documentation
Make sure you have the following items when you head to the closing table:
- Proof of homeowners insurance
- A copy of your contract with the seller
- Your home inspection reports
- Any paperwork the bank required to approve your loan
- Any certified or cashiers checks for money needed at settlement
- A government-issued photo ID (Note to newlyweds who just changed their name: The ID needs to match the name that will appear on the property’s title and mortgage.) Sometimes mail is also needed – check with your title agent if you’re unsure.
Plan to sign a ton of paperwork. An attorney or settlement agent will guide you through the process. When you’re done, you’ll collect the keys and you’re finally home!
It can feel like a whirlwind because so much is happening at once, but rest assured your Realtor – like the Agents at Wissel Homes – will be there to ensure that everything goes smoothy. And if something does pop up, they will help you through it.
The professionals at Wissel Homes know the Central Maryland market because it’s our home too. We live and breathe the local neighborhoods in Howard County, Carroll County, Baltimore County, Anne Arundel County and more. We understand what it takes to get the job done right. Contact us today to set up an appointment to list your home or to start the home buying process. Let our experience help move you into your dream home.