Closing Your Loan Smoothly
In a perfect world, closing on a loan would be a walk in the park. Often times, closings go remarkably smooth. But there are some instances where closing requirements are overlooked. That’s why it’s important to be well informed throughout the process. That’s why we’ve created this handy checklist.
Contract contingencies
Contract contingencies are elements of the offer contract that allow the buyer to get out of the deal. As such, these contingencies need to be satisfied in order for the sale to go through (and for you to close on the loan).
- Financing – Simply stated, your loan application for the sale price of the home needs to be approved by the lender.
- Home inspection – A licensed inspector must examine the house and property for things like a structurally sound foundation, a well-maintained roof, standard electrical wiring and the like. In some parts of the country, lenders may also require a termite and/or a radon inspection.
- Appraisal – This contingency requires that the property appraises for at least as much as the sales price.
Title search
A title search is a process that researches the title history of the property you’re looking to buy to ensure that there are no unresolved claims on the property. Though usually coordinated by the lender, it’s a good idea to double-check to make sure that this has been taken care of before your loan’s closing.
Homeowner’s insurance
Most lenders require at least proof of application for homeowner’s insurance before they will sign the closing documents. Obtaining homeowner’s insurance is the buyer’s responsibility – so don’t let this task fall through the cracks.
Pulling together closing costs
Do you know where the money for closing costs is coming from? Depending on your loan, this is likely a substantial sum, since it includes your down payment, finance charges and any escrow funds. Prior to closing, the lender will provide you a settlement statement detailing all the funds you will need. By law, though, they only need to provide it one day before closing – so it’s a good idea to plan – and budget - for closing costs before then. Usually closing costs can be paid in the form of a cashier’s check. It’s also a good idea to bring a checkbook with you, to cover any discrepancies.
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