Buying your first home is an exciting milestone, but the closing process can be overwhelming if you’re not prepared. To ensure a smooth transaction, here are ten essential tips every first-time homebuyer should know before closing day.
1. Review Your Loan Terms Carefully
Before signing on the dotted line, go through your loan estimate and closing disclosure. Ensure that the interest rate, loan amount, and closing costs match what you were initially promised by your lender.
2. Get a Final Loan Approval
Even if you’ve been pre-approved for a mortgage, final approval is a different step. Avoid making big purchases, opening new credit lines, or making large deposits that could affect your financial standing.
3. Conduct a Final Walkthrough
A day or two before closing, schedule a final walkthrough of the property. Check that all agreed-upon repairs have been made, appliances are in working order, and the home is in the expected condition.
4. Secure Homeowners Insurance
Most lenders require proof of homeowners insurance before closing. Shop around for the best rates and coverage to protect your investment.
5. Understand Closing Costs
Closing costs typically range from 2% to 5% of the home’s purchase price. These include lender fees, title insurance, property taxes, and more. Make sure you’re financially prepared to cover these expenses.
6. Read All Documents Thoroughly
At closing, you’ll sign a variety of legal documents, including the promissory note and deed of trust. Take your time to read and understand everything before signing.
7. Transfer Utilities in Your Name
Avoid arriving at your new home without power or water. Arrange for utilities to be transferred into your name effective on your move-in date.
8. Verify the Title and Ownership
Ensure that there are no outstanding liens or ownership disputes on the property. Your title company will conduct a title search, but it’s always a good idea to double-check.
9. Be Ready for Closing Day
On closing day, bring a government-issued ID, proof of homeowners insurance, and a cashier’s check or wire transfer for the remaining down payment and closing costs.
10. Celebrate and Plan Your Move
Once the transaction is complete, the keys are yours! Start planning your move and enjoy the excitement of homeownership.
Final Thoughts
Buying a home is a significant financial decision, and being well-prepared before closing can save you from last-minute surprises. Follow these ten tips to ensure a smooth closing process and start your homeownership journey with confidence!