There
is no way to guarantee a "smooth" path from an approved contract to the
settlement table, but doing your part is at least half the job. Expect
minor problems and delays along the way. On the seller's side, title
problems are a common cause of postponed settlements. On your side,
bureaucratic snags such as extensive credit checks and slow appraisals
can bog things down. In many cases, there isn't much you or the seller
can do but wait.
While you're waiting for completion of all the processes now in motion, you should:
- Apply for homeowners insurance on your new home.
- Get an exact accounting settlement cost, and make sure the money and necessary documents will be there at closing.
- Select a date for the final walk-through of the house.
- Contact utility companies about starting service in your name.
Insurance on your new home
Your
lender will require you to take out a homeowners insurance policy,
something you would want to do anyway. The lender wants to cover the
amount of its mortgage loan so it can recover the money in the event of
a loss. However, it's up to you to see that your insurance coverage
remains adequate by getting property protection, liability insurance
and/or any additional coverage you think is necessary.
The final inspection
The
house you're buying must be handed over to you in the condition
specified in the contract. To verify this, schedule a walk-through of
the house shortly before settlement, several days in advance is best,
to allow time for the seller to correct any last-minute problems.
Take
along a simple device, such as a plug-in nightlight, to test all
electrical outlets. Turn on the furnace and air conditioning, flush
toilets and turn on faucets, put the washing machine and dryer through
a cycle. In short, put the house through its paces.
If
anything needs fixing or further cleaning, tell the seller immediately.
Neither you nor the seller wants to postpone the settlement, but make
it clear you won't go to closing until a second walk-through is
satisfactory.
What happens at closing
The
closing is where ownership of the home is officially transferred from
the seller to you. Your closing officer works for the title company and
coordinates the document signing and the collection and disbursement of
funds. Your main role at the closing is to review and sign the
documents related to the mortgage loan and to pay the closing costs.
Most
parties involved with the purchase of your new home will attend your
closing. The closing is a formal meeting typically attended by the
buyer(s) and the seller(s) (and their attorneys if they have one), both
real estate sales professionals, and, of course, the closing officer.
The meeting is typically held at the title company's office.
What to bring to closing
For
things to go smoothly, each party should bring certain documents and be
prepared to pay the necessary fees. Many closing costs can be paid by
personal check, but ask the closing attorney or closing officer. A
certified or cashier's check may be required. Find out to whom checks
should be made payable.
The
seller and his attorney are responsible for preparing and bringing the
deed and the most recent property-tax bill. They also will bring other
documents required by the contract. This can include the property
insurance policy, termite inspection, documents showing the removal of
liens and a bill of sale for personal property.
Make
sure you have adequate funds for the down payment and other settlement
costs, arrange for your attorney to represent your interests at the
meeting, bring the loan commitment, inform the lender of the meeting
time and place and have your driver's license ready as proof of
identity. Finally, it's a good idea to bring a copy of the purchase
contract to refresh your memory.
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