Pop the champagne, you made it! You’re ready to close on your home and sadly many buyers won’t make it this far in the process in this market. With low inventory and still tight lending standards many buyers have turned back and decided to rent instead. So glad you’ve made it this far!
So what should you expect around closing time?
First, expect to get your closing figures sent to you 3-7 days before closing. This will allow you to look at all the expenses of your closing (title work, recording fees, lender fees, etc) and make sure they match up with what you were promised by the lender when you applied. They should be close, although some things are out of the lender’s control and can fluctuate a bit. Have your agent take a peek at your numbers as well. It’s not uncommon for your agent, who looks at these figures all the time, to spot something that could save you some money. For example, I recently noticed that one of my buyers was paying about $75 more per month for their insurance than other similar buyers. I brought it up, he made the switch with the savings he can pay for his monthly internet and cable instead!
Once you’ve reviewed the figures and approved them before closing you can prepare your cash to close. The figures will show you how much you need to have at closing and you can then prepare a wire transfer of that amount or a cashier’s check. Talk with your lender before you move money around to prepare this cash to close. If you don’t, you may end up having to provide more bank statements to your lender which is a hassle. (Quick Tip: If you are closing on the sale of your current home and then quickly closing on your next home have the title company mail your proceeds from your first closing straight to your second closing. It will lower your stress and then any excess proceeds can be given back to you at your second closing)
The day before closing you’ll want to do a final walk through. This is one last chance to walk the home and make sure all inspection items were handled, make sure nothing significant has changed at the property and make sure the inclusions are all there like fridge, washer, dryer, curtains, etc. (Quick Tip: Many buyers at this point start to think ahead and will purchase new furniture, appliances, etc for their new home. Don’t use credit for these purchases or you could put your loan approval at risk! Talk with your lender before you make any purchases on credit!)
The actual day of closing you’ll likely need 1 to 1.5 hours to close on the home. Lenders require you to sign a lot of paperwork so be ready to sign a lot of repetitive documents. Closing is not a time to negotiate these documents at all, no one in the room has the authority to let you make any changes. So, if you want to take your time and read every document line by line you really need to request the documents in advance. There is nothing wrong with reading every line (of course you ideally should!) but in reality that doesn’t happen at the closing table & should be done in advance. Let your lender know if you want the documents in advance and we can help make that happen.
Once you’ve signed the documents you get a key to your new home and if the possession date is the same day as closing you can now move in. Many times in this market the buyer and seller have negotiated a Post Closing Occupancy Agreement (“PCOA”), which is basically a short term lease so the seller can stay in the home a little while after closing (up t 30 days usually). If this is the case you don’t get possession of your home the same day as closing, you get it the date that is outlined in the PCOA.