STEP ELEVEN: PREPARING TO CLOSE ON YOUR NEW HOME
There’s a lot to do in the weeks leading up to the closing on a home, so systematic organization is a must. Proper scheduling can reduce stress and prevent mistakes and delays.
- Get Organized
Create a schedule of the items you need to complete before closing. Set up a file with all of your purchase and closing related documentation so you have it readily available.
- Schedule Inspections
A comprehensive home inspection is a must for any responsible homebuyer. A proper inspection should help uncover any defects in the home – before you move in and get hit with unexpected repair costs. Depending upon your location and the age of the home you may need additional inspections as well – radon, termite, septic, etc. Your attorney and realtor can help guide you through this process, so draw on their experience.
- Schedule the Appraisal
Your lender will probably hire the appraiser, but you need to make sure it gets done on time. A satisfactory appraisal is essential to obtaining your mortgage commitment and moving toward closing.
- Review Contingencies
Make sure that any contingencies specified in the contract are satisfied. If the seller is required to make repairs prior to closing, schedule a walk-through to insure that they are properly completed – and don’t hesitate to have your home inspector review the work if you are uncomfortable making the determination yourself.
- Finalize Your Mortgage
Your lender should issue a mortgage commitment shortly after the property is appraised (assuming the appraised value is adequate). Contact your mortgage representative to make sure things are proceeding as expected. Don’t wait until the last minute – if there is a problem you want to find out as soon as possible.
- Order a Survey
You’ll need a survey of the property. Contact the last surveyor who worked on the site and make arrangements at least 2-3 weeks before the closing date. If you are using an attorney, he or she may arrange to get the survey, so check and make sure before you order one as well.
- Order Title Insurance
The amount of title insurance needed is based on the value of your home and the amount of your mortgage. Title insurance guarantees the lender and/or owner against the possibility that there may be an unknown lien or discrepancies in ownership on the property being purchased. It is essential to make sure that the title insurance is ready for closing day. The title company will need to do a search on the property to uncover any potential problems with the transfer. Make sure to leave enough time before closing, not only for the search, but to deal with any problems that surface. If any title problems arise, don’t panic – usually these issues can be resolved fairly quickly. If you are using an attorney, he or she will probably arrange for the title work to be done.
- Prepare Your Purchase Funds
You’ll need to have certified funds available to cover the purchase price and closing costs, so now is the time to cash out investments or make other arrangements to free up the cash. Your attorney can help you determine the total amount you’ll need to bring to the closing.
- Fire and extended coverage insurance policy in the amount of the mortgage. This must be presented at closing. Recommended: Homeowners policy to cover both mortgage amount and your equity in the home.
- All buyers should be present. If this is not possible, tell your attorney or title company in ample time to see if they can make special arrangements.
- Bring certified check to closing, made out to you in the amount of the purchase price less down payment and mortgage, to be endorsed to proper parties at closing.
- Bring some personal checks to cover miscellaneous closing costs, such as attorney’s fee, tax or insurance escrow or adjustments, fuel oil, etc.
- Order telephone service.
- We will take care of having utilities transferred except telephone, if you desire.
- Check your new post office address zip code.
- All sellers should be present at closing to sign deed and affidavit of title or arrange with attorney to sign ahead of time.
- You must have an attorney or title company to prepare deed and affidavit of title for the purchaser. They will need your present deed. For the preparation of the affidavit for a married couple, they need to know the wife’s maiden name and if you or your spouse has been married before to anyone living.
- Bring personal checks for miscellaneous items such as attorney, revenue stamps, etc.
- Have all keys at closing.
- Please give your realtor your forwarding address.
- We will take care of having utilities transferred, except telephone, if you desire
- Purchase Homeowner’s Insurance
You’ll need a binder from your insurance company to verify that you have properly insured the home – otherwise you may not be able to close on your mortgage.
Get Ready for Moving Day
You probably want to move in right after the closing (you’ll have to if you’re selling your old home the same day), so now is the time to start preparing. You need to hire a mover and start packing your possessions. It’s also time to make arrangements for utility shutoffs and installations – our Utility Checklist can help you organize these tasks.
Some utilities require more lead time than others to terminate service at your old residence and activate at the new. While the time required varies, you can use this checklist as a starting point.
One month or more before closing…
- Cable Television and/or cable modem
Contact the cable company early, in case the new home needs any wiring or hook ups to accommodate your service. Call especially early if you are installing cable modem service.
- Phone service
With today’s often complicated home phone set-ups it is important to give the phone company some extra time – especially if you will need several extra numbers and/or jacks in specific locations
- Satellite television and Internet service
Unless your new home has a compatible dish already in place, you will require installation services. Depending upon demand in your area this could entail a wait of a month or more, so put your order in early
- DSL Internet service
DSL installation is subject to large backlogs in most area, so put in your order as soon as possible.
One to two weeks before closing…
- Fuel deliveries
If you receive automatic deliveries of heating oil or propane you should contact the supplier and terminate the service (and transfer the account to your new home if you still require deliveries).
- Automatic deliveries
While they are not, strictly speaking, utilities, any automatic delivery services (bottled water, pool supplies) you may use should be contacted 1-2 weeks in advance of your move to terminate deliveries or change the service to your new address.
- Several days to one week before closing…
- Electrical service
Contact the electric company and switch your account to the new address effective on the closing date (make sure you have electrical service at both locations on moving day).
- Gas service
Contact the gas company and switch your account to the new address effective on the closing date (make sure you have gas service in both locations on moving day).
- Water service
Notify the water company several days before the closing.
- Sewer service
Notify the sewer authority several days before the closing.
- Garbage pickup
If you pay for private garbage pickup you should notify the service provider a few days before the closing. Even if you have public garbage service at your old location you may need to arrange for private pickup at the new house. Check it out – you don’t want to end up without garbage service just after you move in. If you want to have a special pickup – either at the old address or the new – make the arrangements at least a week in advance.
- Electrical service
- Schedule the Walk-Through
The final walk-through should be conducted the day of or before the closing. The walkthrough allows you to confirm that the house is ready and that any required repairs have been completed. If you’re buying a new home the walk-through also gives you a chance to identify any items that have not been satisfactorily completed.
- Several days to one week before closing…
CLOSING TITLE PREPARATIONS
Check with your attorney or escrow agent a day or two before the closing date to confirm that everything is on schedule. Remind them to complete the closing statements and other documentation in advance – this may seem obvious, but closings often become protracted affairs because the professionals are unprepared.
- Have Your Paperwork Available
Bring all of your documentation to the closing in case you need something at the last minute. Your closing file should include the contract, inspection reports, and copies of all correspondence relating to the purchase.
- Bring Certified Funds
You will need to bring a certified check to cover the down payment (less funds already on deposit) and closing costs. Check with your attorney or review the documents to get an estimate of the total amount required. It’s also a good idea to bring your checkbook as well — small last minute costs (filing fees or photocopying charges) can often be paid with a personal check.
- Understand the Closing Documents
Review the closing statement (HUD-1) and other documents beforehand so you understand the purpose of each.There are a number of documents that have to be reviewed and signed at the closing. Each serves a different purpose, but all – or most – are required to complete the purchase.
- The Note
This is your contract with the lender whereby you agree to repay the loan with interest as specified.
- The Mortgage
The mortgage provides the lender with a claim against the home you are purchasing as security for the note.
- Truth in Lending Form
This is a form that confirms that your lender has disclosed all loan costs to you in accordance with legal requirements.
This stands for, “Real Estate Settlement Procedures Act.” It is essentially a declaration that you understand the closing procedure.
- Homeowner’s Insurance
Most lenders require that the first year’s homeowner’s insurance premium be paid in full before the loan proceeds are released at the closing.
- Closing Statement (HUD-1)
This is an accounting of all amounts that are due to and from the buyer and seller in the transaction. The HUD-1 lists all of the uses of the sale proceeds, including the payoff of the seller’s mortgage, apportionments for property taxes, real estate commissions, etc. The statement is used to determine a final amount of cash that is due to or from the buyer and seller.
- The Note
- Close Your Mortgage
- You will probably execute your note and mortgage just before the closing of title. The lender should have provided a check to be released subject to the execution of the documents, the confirmation of clear title, and the satisfaction of any other conditions.
- Deal With Any Problems
Closings frequently proceed without a hitch, but problems are not uncommon. Don’t panic if the closing hits a snag – most issues can be resolved by simple means, such as escrowing funds to cover a contingency or unfinished repair. Even if the closing has to be postponed, don’t overreact – chances are the matter can be resolved in a few days.
- Execute the Documents
At this point, the parties should execute the closing statements and the seller should sign over the deed. The deed must be filed with the local recording agency – your attorney or escrow agent should handle this but it’s a good idea to confirm that this was done. Congratulations, you’ve just bought a home!
- Collect the Keys and Other Items from the Seller
In addition to the keys, the seller should bring (or leave in the house) any relevant paperwork – service records, warranties, instructions, etc. If these are not provided, request that they be forwarded as soon as possible.
- Have Your Paperwork Available