You’ve made it to the fourth, and final instalment of Your First-Time Home Buyer’s Guide. Through parts one, two, and three we discussed finding an agent and securing financing, navigating your home search, and offers and negotiations. In this section, we will cover the home stretch of your home buying experience, “closing,” as shared in Your First Home (Second Edition), written by Gary Keller and Jay Papasan.
1. What To Expect During Closing
Your agent and lender will be focused on verifying that everything is as it should be:
- Making sure your finances are in order
- Finishing any paperwork
- Doing final checks on the house
- Confirming the home’s value and legal status with the lender, (which includes a survey, appraisal, title search, and a final check of your credit and finances)
Your agent will keep you posted on how each is progressing, but unlike the previous hands-on stages of your home buying adventure, your work is pretty much done.
At this point, you don’t have much to worry about other than keeping your finances tight and your credit clean. You’ll also need to confirm with your agent that you’ll have all the necessary documents and funds you’ll need so you can move smoothly into your closing day—and into your new life as a homeowner.
2. Final Verifications for the Lender
Just as you confirmed the value of your future home through a property inspection, lending institutions also take certain steps before finalizing a mortgage to make sure they are backing a sound investment.
These include the following:
- An appraisal to confirm the value of the property
- A survey to confirm the legal boundaries and entitlements of the property
- A title search to verify the ownership of the property
- Title insurance to protect against mistakes in the title search
Chances are good that these final steps—which, incidentally, you will pay for as part of your closing costs—will go smoothly. The whole point of these pre-closing verifications is to look for problems that occasionally arise.
If you run into a patch of trouble, think of it this way: you’ll feel lucky if a title search or survey reveals a property’s questionable ownership or boundaries before closing, rather than after the house is already yours.
3. Countdown to Closing
Once you and the home have checked out, you’ll receive your final loan commitment. Only then will the closing company schedule a time and place for the closing. (In Canada, this should be discussed with your lawyer.)
As the big day approaches, confirm with the appropriate parties that you have everything you need in order to close and transition smoothly into your new home.
This will include the following:
- Settlement statement
- Certified funds
- Evidence of insurance
In your closing stage, your agent and lender will be focused on verifying that everything is as it should be: making sure your finances are in order, finishing any paperwork, and doing some final checks on the house.
4. Final Walk-Through
The day before closing, you’ll get the opportunity to stroll through the home that will soon be yours. Take a deep breath. Feel proud. And then, look around carefully. The final walk-through provides your last chance to make sure the home is clean and all requested repairs have been made. If by some chance something is left undone, let your agent know immediately so she can negotiate with the seller’s agent.
5. Closing Day – Congratulations!
Closing day is a life-changing event: you walk in a renter and walk out a homeowner. Whatever you feel the morning you wake up to close, there’s one thing you can count on—you’re prepared. On closing day, you can expect to sit at a table with a bunch of pens and sign your name so many times you start to feel like Captain Kirk at a Star Trek convention.
The settlement agent who runs the show may be an attorney, a representative of a title company, or someone else entirely. You may be sitting across the table from the seller, or you may be all the way across town. Your agent or a member of the agent’s team may attend to explain any last-minute questions.
During this process you will:
- Finalize your mortgage
- Pay the seller
- Pay your closing costs
- Transfer the title from the seller to you
- Make arrangements to legally record the transaction as public record
You might get the keys immediately, or the key handover might take place only after the funds clear and the transaction is legally recorded.
You’re a homeowner!
This means you’re building up equity, enjoying tax benefits, and revelling in the freedom to paint your dining room any colour you please!
If you need professional referrals, market advice, homeowner tips, or representation down the road, our experts at OG Realty Group are always ready to help.
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