After weeks or months of searching, you found your dream home. A lender approved your mortgage application – congratulations! – and the buyer accepted your offer. But before you get swept up with picking that perfect shade of paint for the kitchen, you must endure one more big step – a formal closing.
Considering that buying a home is such a huge commitment, it’s not unusual for your nerves to go crazy in the days leading up to the closing. But before you’re required to sign – many times – on the dotted line, follow these tips to help the process go as smoothly as possible on the big day.
Read your Closing Disclosure – twice
Your lender must provide you with a Closing Disclosure – a five-page document outlining your loan terms – three business days before your closing date, according to the Consumer Financial Protection Bureau. Once you receive the Disclosure, take time to read it. Double-check the stated interest rate, loan amount and monthly payments – they should match your most recent Loan Estimate.
To find out exactly how much you’ll owe on the big day, including the agreed-upon down payment and closing fees, refer to the Costs at Closing section of your Disclosure. Bring a cashier’s check for this amount to the closing.
Take your time – you don’t want to rush closing
Because there isn’t a clear way to know how much time your closing will take, set aside several hours for the appointment. You may want to take the whole day off work – this isn’t something you’ll want to squeeze in on your lunch break. Closing on a home marks one of the most important financial commitments you’ll likely make, so it’s best not to rush through it.
Arrive at your closing well-rested and in a clear mental state. Although you already should have reviewed the Closing Disclosure, it’s important to read every section again carefully before you sign, making sure all numbers are correct. If you have questions as you go through the contract – such as when monthly mortgage payments are due or how to pay property taxes – this is the time to ask.
Protect your new investment ahead of time
Most lenders require buyers to have homeowners insurance in place at closing, and it’s important to understand clearly how the policy will protect your new investment. According to the Insurance Information Institute, a standard homeowners policy typically covers the structure of your home in the event of fire, some weather-related damage or vandalism; helps replace stolen belongings; and can assist with certain medical expenses if someone gets injured on your property.
However, depending on where you live, you may need to purchase additional coverage, such as flood insurance. If your new home includes a pool, you may need to increase your policy’s liability limits. Discuss the details with an independent agent to make sure you get all the coverage you’re looking for. Since the process of getting home insurance can take some time, plan accordingly so you’ll have coverage at the time of your closing and can bring proof of this insurance to the session.
Now, make the house your home
If – fingers crossed – your closing went off without a hitch, take a moment to bask in the glory of homeownership.
As you cross the threshold of your abode with shiny keys in hand, give yourself a pat on the back. The complicated process of buying a house is behind you, and it’s now time to make it a home.