The time from contract ratification to closing can often take anywhere from 30-45 days. While there may have been some ups and downs during the whole process, the closing is in sight, and a positive settlement experience is in store.
At Highland Title + Escrow, we want to do everything we can to support you and get your client over the threshold in a timely fashion. That includes sharing what can be done prior to closing day to ensure smooth sailing all the way to the final signatures at closing.
Usually, a closing is approximately an hour, but ultimately, our team’s goal is to get through each step effectively and efficiently. Here are 4 steps to consider when preparing your homebuyer for closing day. Feel free to share this list with your buyers!
- Organize and understand documents. There is a lot of paperwork, but let’s focus on these three…the closing disclosure, title documents and loan application.
- Closing Disclosure: This includes loan information which should be received three days before closing day. It’s the law. The information should contain the estimated payment, loan amount, interest rates, loan disclosures, and the amount of money needed for closing. Encourage your client to review this document and compare it to the loan estimate. Any mistakes found must be rectified before the documents are signed.
- Title Documents: These documents prove that the seller has the right to sell the property. A title search is also done to ensure that there aren’t any liens or outstanding debt associated with the property that your buyer could become responsible for once possession is taken. A real estate lawyer or title company will review the reports to make sure everything is in order prior to closing.
- Loan Application: If it hasn’t been said enough, review, review, review. Time will have passed since the original loan date; make sure nothing has changed
- Select a homeowner’s insurance plan. It’s vital to protect what is being bought, and most lenders will require proof of a homeowner’s insurance plan before or during closing. The insurance plan’s cost will depend on the following: coverage, conditions and features of the home and the down payment.
- Prepare your finances for closing day. Closing day expenses must be paid at the closing appointment; here are the costs to consider:
- Closing costs: These fees are paid to the lender to close the loan. This cost might also include several fees, including the appraisal and title insurance and can be 3%-6% of the cost of the home. The borrower will get a Closing Disclosure from their Lender, and the Lender will provide the more accurate estimate for funds needed. The down payment and the type of loan will determine whether your client needs private mortgage insurance (PMI).
- Lender Credits: In exchange for a higher interest rate, the Lender will take on closing costs if money is tight. While this may help at the moment, your client will pay more interest over the life of the loan.
- Cash to Close: The down payment makes up the bulk of this cost depending on the type of loan. (A USDA or VA loan may not require a down payment.) Cash to close is all of the funds needed on closing day. Certain payments already made, including the earnest money, could reduce the buyer’s cash to close amount.
- Seller Concessions: You might encourage your client to request seller concessions to cover closing costs or home repairs. Sellers often agree to concessions to sell the home quickly or to help cover an issue found during the home inspection.
- Bring these items to the actual closing table. Help your homebuyer make a list and check it twice to make sure they bring the following to your closing appointment:
- A driver’s license, passport or government issued ID
- Cash to close in the form of a cashier’s or certified check (These costs can also be wired with the bank’s assistance.)
- A checkbook so a personal check can be written in case small changes are made to the bottom line
- Closing disclosure statement to compare to the closing documents
- Proof of homeowners insurance
- Your contact information if you won’t be present at the closing
While these points can help things go smoothly, there are others that can’t be controlled. A home inspection or low appraisal can slow things down considerably. Your clients trust you, and if you share with them the importance of this list, we know they will listen to you. You might also share this great resource concerning wire fraud to help them protect their investment.
Ultimately, closing days should be enjoyable and exciting. While all of these things can seem daunting, it will send you sailing across the finish line in the end. You can encourage your buyer to choose their title company, and choosing Highland Title + Escrow is choosing a smooth settlement. Call us today at 703.723.3300 to get started.
A seller’s disclosure applies in Maryland and Washington, D.C.