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In the day or two leading up to the closing, make sure you have everything in place for the big day. While your attorney or closing agent is busy doing behind-the-scenes work - preparing paperwork, getting information from the other parties - you can do several things to make sure the closing goes smoothly:
- Take the final walkthrough.
- Get the final amount for the closing costs. The Good Faith Estimate you got when you applied for a mortgage has some teeth to it - federal law prohibits lenders from raising many of the costs listed there; others may go up by a maximum of 10 percent. So you should already have a good idea of your closing costs. But for the closing, you need to know the exact amount, including the fees you'll pay the seller for things like prorated property taxes and heating oil left in the storage tank. Call your attorney or loan originator and ask for a copy of your HUD-1 form, which, by law, lists all the fees you and the seller need to pay. Review the form to make sure it squares with your Good Faith Estimate.
- Make arrangements to pay. At the closing, you pay the down payment for your house and the closing costs with a certified cashier's check or by wire transfer. If you live in an escrow state, where an escrow agent holds funds and signed documents in trust until the transaction completes, you may be able to pay by personal check, but you have to submit your payment far enough in advance so that it clears well before escrow closes. In non-escrow states, where the closing takes place during a single meeting, a personal check won't work for these major costs. Your lender wants you to pay instantaneously, using a method that won't take days to clear: usually with a certified bank check or cashier's check or by wire transfer.
If you pay with a certified or cashier's check, get the check from your bank the day before the closing. Make it payable to yourself; you'll sign it over to the closing agent or attorney when you close. If you pay by wire transfer, ask your bank ahead of time how it conducts wire transfers. Banks have different policies related to this payment method; make sure you know your bank's so you don't hold up the closing. - Wrap up any lingering issues. You and the seller should have met the obligations in your purchase agreement by now. But read over that document to make sure the seller's met all the conditions of sale. Have you released all the contingencies? Has the seller taken care of all the agreed-upon repairs?
- Review documents. Often, the loan originator or attorney doesn't finalize the closing documents until the day of the closing. But ask them for a copy of any draft documents that are ready the day before. (If there are no draft documents, ask to see the standard forms used to prepare the documents.) Read over the documents, and ask about anything you don't understand or that looks wrong. Better now than at the closing, when you may feel rushed or intimidated by all the people and paperwork.
- Make sure your real estate team has everything it needs from you. Get those i's dotted and t's crossed. Call your real estate agent, your attorney, and your mortgage broker or loan officer to make sure that no one is waiting for you to hand in any of your paperwork and that there are no lingering details for you to attend to.
- Gather what you need for the closing. Here's a list of what you should bring:
- A government-issued photo ID. Bring your driver's license or passport so you can prove who you are. One of the closing attendees is a notary public, a state-appointed public servant who verifies the authenticity of signatures. This notary will witness your signature.
- A certified bank or cashier's check. This check pays your down payment and closing costs. (Of course, if you plan to wire the money at closing, skip the check.)
- Your checkbook. Even though you pay the big costs with a certified or cashier's check or a wire transfer, you may have to pay for small adjustments - like increased homeowners' association fees or the final volume of heating fuel in the storage tank - so bring your personal checkbook. You might even walk out of the closing with a couple of checks made out to you.
- Your Good Faith Estimate. When you applied for your loan, the lender gave you a Good Faith Estimate detailing the terms of your loan and estimating closing costs. You'll want to compare the GFE with the closing costs listed on your HUD-1 form.
- Your mortgage commitment letter. This letter formally states the amount and the terms of your mortgage. Use it to correct any discrepancies in the loan documents.
- Your rate lock letter. If you locked in your interest rate, bring the letter that confirms that rate. If the interest rate on the loan papers is higher than your locked-in rate, you have proof of the correct rate.
- Proof of homeowner's insurance. Bring along the binder you got from your insurance agent when you bought homeowner's insurance, along with a receipt that shows you paid the first year's premium.
- Home inspection reports. Bring the general report and any special-inspection reports.
- A calculator. If you want to double-check the math on your HUD-1 form before you sign it, a calculator comes in handy.
- Anything else the lender requires. All closings are different. Call your bank representative, closing agent, or attorney and run down the list of what you intend to bring and ask if you forgot anything.
Take the day of the closing off from work - most closings take no more than an hour or two, but it's wise to be prepared for delays. And get a good night's sleep beforehand. You want to be sharp for the meeting.
