Chapter 9: Closing the Deal
Preparing for the Closing Process
Closing on your new home is the final step in the home-buying process, during which you’ll sign legal documents and officially take ownership of the property. As you approach the closing date, it’s essential to prepare by completing the following tasks:
- Finalize your mortgage: Ensure that your mortgage is approved and that all conditions have been met before closing.
- Obtain homeowners insurance: Your mortgage lender will likely require proof of homeowners insurance before closing. Shop around for the best rates and coverage to protect your investment.
- Review closing documents: Your lender and title company will provide you with closing documents, including the Closing Disclosure, which outlines the terms of your mortgage and itemizes closing costs. Review these documents carefully and address any questions or discrepancies before closing.
- Conduct a final walkthrough: Schedule a final walkthrough of the property within 24 hours before closing to ensure that any agreed-upon repairs have been completed and that the property is in the expected condition.
Closing Costs and Fees
Closing costs are the fees associated with finalizing your home purchase, typically ranging from 2% to 5% of the purchase price. These costs can include:
- Loan origination fees: Charged by your lender for processing and underwriting your mortgage.
- Appraisal fees: Paid to the appraiser for determining the property’s market value.
- Title search and insurance fees: Charged by the title company to research the property’s title and ensure it’s clear of any liens or claims.
- Recording fees: Paid to the county or municipality for recording the transfer of the property’s title.
- Escrow fees: Charged by the escrow company for holding and disbursing funds during the transaction.
- Prepaid expenses: Costs paid in advance for items such as property taxes, homeowners insurance, and mortgage interest.
Final Walkthrough and Signing Documents
During the final walkthrough, you and your real estate agent will check the property for any issues and ensure that any agreed-upon repairs have been completed. If you discover any problems, you may need to negotiate a resolution with the seller before proceeding with the closing.
At the closing appointment, you’ll sign several legal documents, including the mortgage note, which outlines the terms of your loan, and the deed of trust, which secures the mortgage. After signing, you’ll provide the down payment and closing costs, either by cashier’s check or wire transfer.
Once all documents are signed and funds have been disbursed, you’ll receive the keys to your new home.
Key Takeaways:
- Prepare for the closing process by finalizing your mortgage, obtaining homeowners insurance, reviewing closing documents, and conducting a final walkthrough of the property.
- Be prepared to cover closing costs, which typically range from 2% to 5% of the purchase price and include fees for loan origination, appraisal, title search, and more.
- During the final walkthrough, check for any issues and ensure that agreed-upon repairs have been completed. If problems are discovered, negotiate a resolution with the seller before closing.
- At the closing appointment, sign legal documents, provide the down payment and closing costs, and receive the keys to your new home.