New homeowner with keys, house sold

October 31, 2015

Buying A Home, Step 7 – Closing the Deal

It’s Closing Day! Personally, I think we should call it Opening Day, because it’s the day your new adventure as a homeowner begins! We use the term closing though, because it’s the day we ‘close the deal’ and it’s always been used, which is another reason for changing it to opening day. Opening day creates a more positive feeling, after all, like opening day of hunting season, or baseball or football or… you get the idea.

Here’s what happens on closing day:

You wake up and pour yourself a cup of coffee, then scan the news for anything important that happened overnight. Maybe you check your email too. Finish checking all the nooks and crannies of your current house, too, so you don’t leave anything behind.

If this isn’t your first time buying a home, you’re probably feeling pretty relaxed, which is good.

But if this is your first home purchase, the jitters may creep in:

  • What if we’re making a big mistake?
  • What if the inspectors missed something?
  • What if one of us loses our job?

These concerns are all very normal, although not very reassuring. That’s our brain acting in its prehistoric, survival-based mode- always scanning for threats and looking for danger. Today, we don’t have to use this part of our brain to survive the day-to-day (though some of us spend way too much time in survival mode), so when it gets activated by a life-changing decision, it really freaks us out.

Not to worry.

Despite what you read on the internet, not all mortgage lenders are crooks, and most real estate agents are honest.

Sure, a few exist here and there, spoiling your impression of the entire industry, but that’s true in all industries. Don’t let those few bad apples ruin your expectations.

What usually happens is this:

The day before closing, you’ll need to get a cashier’s check for the rest of your funds needed in the transaction. This can range from several hundred to tens of thousands of dollars. Ask your Realtor if you don’t have this number. Personal checks are usually not allowed. You can also have the funds wired to the Title Company ahead of time.

Day of closing, you’ll drive to the title company’s office or to your Realtor’s office at a predetermined time for signing of the closing paperwork. It’s possible that the seller signs *after* you but normally they’ll sign first,¬†allowing you to take possession at the earliest opportunity.

You’ll be greeted by the Escrow Officer (the person in charge of making sure all your paperwork is prepared and complete before signing) and maybe your Realtor. You may be offered a bottle of water or a shot of whiskey *j/k*.

You’ll sit down and the Escrow Officer will get to know you a little bit, ask if you have any questions, then pull out the paperwork. Don’t be alarmed at the size of this stack; it goes pretty quick, actually.

Some of the docs you’ll sign or receive at closing include:

  • The Title Company’s “Commitment to Insure”
  • Mortgage docs
  • Settlement Statement (HUD-1)

The Commitment to Insure is the Title Company’s confirmation that they have checked the title for any blemishes, and they are comfortable with its history. This is important because you’ll want a clear title in the future, when you’re ready to sell.

Mortgage docs are all the forms related to the financing of your home through a mortgage lender. There are a lot of forms in this stack; make sure you ask questions if you don’t understand something.

The Settlement Statement outlines all the costs associated with the purchase of your home: commissions, title fees, property tax proration, HOA dues proration, home warranty costs (if applicable), and document delivery fees, if any.

The Escrow Officer will explain each form to you: what it means, how it impacts you and the transaction, and any other important details. Don’t be afraid to ask questions.

After all documents are signed, you’re done! You’ll receive all the keys and garage door openers, alarm fobs and anything else material to the appliances left in the home for, along with a packet with all the paperwork you just signed. Now you’re off to Home Depot to buy paint for your new home. Sometimes the extra keys, garage remotes, etc are left behind in the home instead of brought to closing. It can happen so many different ways.

If the seller has already closed, then congratulations! It’s officially yours!

Check the contract for the actual possession date you negotiated. Sometimes, it’s set to default to 5pm on the day of closing, but it can always be negotiated.

PRO TIP: Bring two forms of ID (just in case) to the closing table. Usually a Driver’s License is sufficient, but occasionally two forms are necessary.

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