Section 11: The Closing Process
Your offer was accepted, the inspections have been completed to your satisfaction, and the home appraised to qualify for the mortgage. Here is some advice for the closing.
Give yourself enough time. Do not set a short closing date unless your are paying cash. There are many steps to a home purchase. It takes time for the loan process to wrap up. A short closing date might predate final loan approval.
Avoid closing at the end of the month, if possible. This is the busiest time for the various agents involved, and unexpected issues are better dealt with if title officers and lenders are readily available and not overloaded with other demands.
Make the closing align as closely as possible with the actual move from your current residence to your new home. Ideally, your move should be from one to the other without a hotel stop in-between.
Arrange with your local utility companies to ensure they can start service on the closing date. Living without water, heat, air-conditioning, or internet access until they are activated is unnecessary and unpleasant.
Mortgage payments are almost always due on the first day of the month so you will need to prepay interest on the loan from the day of closing through the first day of the following month. For example, if you close on July 10, you will have to pay 21 days of interest. If you close July 25, you will pay 6 days. Closing at the end of the month reduces out-of-pocket expense at closing, this is in part why end-of-month closing dates are popular.
If you fail to close when scheduled, there can be consequences such as increase in closing costs and contractual penalties for the delay. In a seller's market, this opens the door to cancelling the sale, and the seller accepting a backup offer that is potentially better than yours.
Get Ready For Closing Day
There may be several people at the closing, including a seller or seller's representative, real estate agents, lender's representative, title company's representative, closing agent, and a public notary. Sometimes buyers and sellers close at the same time. Sometimes buyers and sellers close at different times.
The purpose of the meeting is to sign documents for the sale and transfer of the property from seller to buyer. Do not sign anything if it is unclear to you, different from what you agreed to, or just seems wrong. Make sure that you understand what you are signing and how your payments will be distributed over time.
After You Sign The Papers
Take the keys and start moving into your new house. You are now a legitimate homeowner responsible for a mortgage loan. As stressful and complicated as it is, when you finally get through with the buying process you will be able to relax and enjoy your new home.