When you’re buying your first home, few things are more exciting (or stressful!) than the lead-up to closing day. Negotiations and inspections may be nearly finished, but now there’s a laundry list of things to do, and even more to keep track of.
Having a great real estate agent in your corner will be a big help for sure, but having your own checklist to refer to throughout the process can also offer clarity and peace of mind during an otherwise hectic time. That’s why we’ve prepared a comprehensive checklist for closing on a house for you to refer to during these final days before your new home is officially yours.
Now, let’s go through this step-by-step!
After your offer is accepted
Once the seller has said “yes” to your purchase offer, the ball is back in your court and it’s time to…
Submit your earnest money
If earnest money is part of your offer, you’ll need to hand over those funds. This will likely take the form of a cashier’s check or wire transfer to be held in escrow by a third party — such as a title company — while you wait to close.
Your agent will guide you through this step, but in short, the money will be held in a neutral account until it’s applied to your purchase at the closing table.
Apply for your mortgage
You’ve — hopefully — been in contact with a lender, so this next step should just be finalizing your mortgage application.
If you were preapproved for a mortgage, you’ve probably already submitted your documents to determine eligibility, and now it’s a matter of your lender formally processing your application and completing their due diligence on the loan.
If you’ve only been prequalified, you may have a little more work to do. Your lender will tell you exactly what they’ll need, but be prepared to submit financial documents such as pay stubs, investment statements, proof of down payment funds, and so on.
Wherever you are in your mortgage application process, you’ll want to be extremely mindful of your financial choices between now and closing. Avoid opening any new accounts or making any major purchases, and don’t make any large cash deposits (even those from personal savings) that you haven’t already discussed with your lender.
“To most people, money is just fungible. But large cash deposits — usually $1,000 is the trigger — where the funds can’t be sourced are a problem for underwriters,” says Kain, who implores his clients to avoid depositing their at-home cash stash while applying for a mortgage.
Point being, until your mortgage is approved and processed, don’t do anything that could cause an eyebrow to raise in question of the accuracy of your reported income and assets.
Review your Loan Estimate
Your Loan Estimate is a document your lender will send to you after you’ve applied for your mortgage. This will outline all of the estimated costs and fees of your proposed loan.
Review this document carefully and discuss any questions you may have directly with your lender — you’re about to borrow a big chunk of money, so be sure you understand what you’re getting into!
Order an inspection
Once you’re under contract on your home-to-be, your due diligence clock starts ticking. In most cases, you’ll have 14 days to order any inspections.
You’ll want to have a full home inspection conducted, and maybe one or two specialized inspections as well. This can mean bringing an expert specifically to look at the HVAC system, to seek out signs of pests, to inspect the electrical system — or anything else you’d like someone to take a closer look at. Your real estate agent can make recommendations if there are common specialized inspections in your area.
Order an appraisal
In most cases, your lender will handle this for you. If they haven’t mentioned anything about a home appraisal, feel free to ask about it just to ensure that the ball keeps rolling. And on that note, be prepared to present any additional documents the lender may need from you to finalize your loan approval once the appraisal has been completed.
“There’s not a lot of clarity once that appraisal is back and your file goes to underwriting,” says Kain.
“With a lot of lenders, that may be the first time a human goes through the whole file — things are so automated now. Just be ready to fetch additional tax documents, income or job-related documents, that kind of thing.”
Lock in your interest rate
If everything is moving along according to plan and you’re feeling good about your Loan Estimate, go ahead and lock in your interest rate with your lender if that hasn’t already been done.
Order a survey
Property surveys aren’t always a must, but they can be a good idea if there’s any ambiguity as to where your property lines fall.
If you’re buying acreage, planning to put up a fence, or considering eventual additions to your home, then you may want to order a survey and have this valuable information before a neighbor comes knocking in complaint of boundary violations.
Understand your payment options
Buying a house involves multiple money transfers. Between your earnest money, down payment, the funds when your loan comes through, and any credits you may be due from the seller, it’s important to understand exactly how Dollar Amount A will safely reach Proper Account B.
Scams can and do happen, so talk through this process carefully with your agent, lender, and settlement services provider (this could be a title company, the lender directly, or a real estate attorney) to make sure there is no question as to where your money is going and how it’s getting there.
Not all states require the use of a real estate attorney for closing, but using one is always an option. As GPS Law Group in Charlotte, North Carolina, puts it, “A real estate lawyer can help the transaction go smoothly and mitigate risk.”
As a first-time homebuyer, if working with an attorney isn’t required in your state but will help you feel more comfortable with the closing process, don’t hesitate to ask your agent for a recommendation.
Two weeks before closing
The clock is ticking, but you still have time to handle any lingering concerns and address key points.
Get homeowner’s insurance
You’ll need proof of homeowner’s insurance to finalize your mortgage, so now is the time to secure some.
If you’re satisfied with your auto or renter’s insurance provider, you can inquire about their policies for homeowners — or, ask your agent or lender for a recommendation. Your insurance agent is also a good resource!
Check on the title review
The title review is an important step in the closing process.
A clear title is one that is free of any liens or claims on the property that could trip up — or entirely prevent — you from closing on your home.
You’ll also want to ask about title insurance, which can protect you in the event that a title later turns out to not be as free and clear as was reported. Title issues can cost thousands of dollars to fix, and title insurance can cover those unsavory expenses if an issue does arise.
If you’re using a mortgage, you’ll likely be required to purchase title insurance to cover the lender. You can also choose to purchase an additional homeowner policy to cover yourself.
One week before closing
You’re in the final stretch! Here’s what to do next.
Double-check your funds
Check your Loan Estimate and make sure your funds are where they need to be for closing. The morning of settlement is not when you should be scrambling to make transfers between multiple accounts.
Confirm the closing appointment
Be sure you know exactly where closing will take place. Have the address, time, and office contact number at the ready, and understand how you’ll get there if you’re not familiar with that part of town.
If your closing will take place virtually or over the phone, make sure you have the dial-in number or meeting link ready to go.
Three days before closing
You’re so close!
Review the Closing Disclosure
The Closing Disclosure outlines your loan details and includes an itemized list of costs associated with your purchase. It’s issued by the lender three business days before closing, and it is an updated and more final version of your Loan Estimate.
This document can be overwhelming, but it’s important to review it carefully and address any questions, errors, or inconsistencies prior to the day of closing.
As time is of the essence, “I usually tell my clients to direct questions about the Closing Disclosure to the lender, because it’s the lender’s document. But if the lender’s answer isn’t satisfactory or if they have additional questions, then absolutely give me a call,” Kain shares.
The day before closing
Prepare for a busy day — this is truly your last chance to tie up any loose ends.
Take a final walkthrough
This step is especially important if you requested any repairs following the home inspection, but a final walkthrough should take place regardless of any negotiated changes.
This is your opportunity to ensure that the home is in the agreed-upon condition and that you won’t make any unexpected discoveries once the keys are in your hand.
Review your loan documents
By now, your loan should be finalized and ready to go. You can ask your lender for all the documents and review those carefully if you haven’t done so yet.
Triple-check closing details
Again, make sure you’ve confirmed the address (or meeting link) and time of your closing.
If you’ll be arriving by car, make sure you know how long it’ll take you to drive there, and don’t forget to account for traffic.
If you’re dialing in virtually, ensure that any necessary software, updates, or apps have been installed on your computer and are functioning properly. Plan to dial in a few minutes early to allow for technical hiccups.
Triple-check your funds
Do you have your cashier’s check or proof of wire transfer ready for your down payment? If not, now is the time to make sure everything is in order!
Compile your documents
Grab a folder and make sure you’re ready to go with the following:
- Photo ID (this will need to be a government-issued ID, such as a driver’s license or passport)
- A copy of the sales contract (if you and the seller went back and forth a few times, make sure it’s the final version!)
- The aforementioned cashier’s check or proof of wire transfer
- Proof of homeowner’s insurance
- Your copy of the Closing Disclosure
On closing day
Closing day is finally here!
Bring all your documents
Remember the handy folder you put together yesterday? That’s the one. Give it a final flip-through to make sure you have everything ready to go.
Be ready to read
If you’re closing with a real estate attorney, they’ll probably go through each document in detail, but be ready to read and review lots of paperwork today. If you use reading glasses, don’t leave them behind!
Understand your escrow
By now, you’re aware that your mortgage payment involves more than just your loan principal and interest. There are also property taxes and perhaps even mortgage insurance to account for, and while these are likely rolled into your mortgage payment, make sure you understand exactly how this works and when you can expect taxes and insurance payments to be made.
If your home is part of a homeowner’s association (HOA), clarify how those fees will be paid, too. They aren’t typically included in your mortgage payment, so find out when your first fee payment is due, how it should be paid, and for how much.
At last, the home is yours. Feel free to take a breath before you begin the next big phase of moving in.
While major concerns were likely addressed at the closing table, if you do find yourself facing any questions in the days (or weeks) following closing, don’t hesitate to reach out to your real estate agent, lender, or the official who facilitated your closing.
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