This blog assumes you’re at the final steps of the mortgage process. You’ve completed your loan documentation, received your appraisal and title insurance, your loan is approved, and you have scheduled your movers. Now you’re ready for it to be over, but there is more to consider. Settlement day, a.k.a. closing day, can bring surprises and unexpected stress. Spend some time on these final closing details with a couple of tips that I give my clients on how to be prepared for the big day.
- Take a moment to check out this loan tracker to make sure you completed all of the important steps.
- Verify with your lender that they have received the title work from the title company.
- Double check with the title company that there are no outstanding tax liens, claims on the property, restrictive covenants or unpaid HOA fees.
Hold Off on Major Purchases
It’s almost time to move in and you already want to start decorating your new home. Small purchases shouldn’t be an issue, though any large purchases made on your credit cards can negatively affect you. Resist the urge to buy a new car or any large pieces of furniture. If a large purchase cannot be avoided let your lender know first! The best advice is to wait until after closing day for any major purchases.
Before you get to the day of closing on your new home be sure to arrange the transfer of any utilities. Find out whether the seller has any unpaid utility bills prior to transfer of service. It’s a good idea to ask about the cost of the monthly utility bills and figure it into your monthly budget.
Call the utility companies: water, electricity, and natural gas. The utility companies usually require advanced notice to switch or start service. Make note of the notice required and call them back when you know the confirmed closing date. Also be sure to discontinue services at your soon-to-be former home. Services that can wait until you move in are telephone, cable or satellite TV, internet, trash collection, and security/alarm systems.
- On closing day you must have either a cashier’s check payable to the title company or be able to wire funds. Does your title company require a cashier’s check or a wire transfer? If they require a wire transfer, ask for wiring instructions. Start a wire transfer 2-3 days before closing to be safe. A cashier’s check or wire is made payable to the title company and given directly to them.
- A lender has to send you a copy of the latest estimate of the Closing Disclosure 3 days in advance of closing (Saturday’s are included in the 3 days). If the amount you pay is more than the final total the title company will refund you the difference.
- If you pay too little to the title company, then you can pay the difference with a personal check. Bring your personal checkbook and photo ID to closing.
For closing on a cash-out refinance, you will not receive your funds until four days after closing.
Closing Documents Sent
Check with your lender that all the necessary closing documents are sent to the title company, preferably a day before the closing date.
Now you are almost ready for closing on your new home!
Closing Day Checklist
The best and most detailed checklist is the Mortgage Closing Day Checklist – Consumer Financial Protection Bureau. Click on the above link to review or download a .pdf version of this checklist.
Schedule a Final Walk-Through
Avoid unexpected surprises and ask for a final walk-through before settlement. This way you can be assured that any repair or cleaning requests have been properly handled. Make a list and double check which items in the house are staying or going.
It’s Time to Close! Settlement Day Procedures
On this day you take possession of the property and officially pay for the home. The keys are handed over to you and you can now start moving into your new home! The closing agent will go over the following:
- Down payment
- Recordation taxes
- Lender costs
- Title costs
- Prepaid property taxes and homeowners insurance
- Prepaid per diem interest
This is a good time to ask about any homeowner association fees (HOA) and where to send monthly payments.
After the overview of document details, you’ll be asked to sign the mortgage note and mortgage agreement. The mortgage note holds you responsible for payments to the lender. The mortgage agreement entitles the lender to sell your property and apply the sale price against the amount you owe plus expenses if you do not make the required payments. The seller will give you the signed deed, which is the title to the house.
Congratulations, you are now a homeowner! The deed and mortgage will be recorded in the Registry of Deeds.