The closing process is one in which many have come to dread. While it is perhaps the most important meeting regarding the acquisition of a property, it can be a significant burden to those that are unprepared. Not to be taken lightly, the closing process requires an acute attention to detail and an unparalleled comprehension of the transaction at hand. Therefore, it is imperative that you take the appropriate steps to facilitate a smooth closing process.
Those that neglect to prepare accordingly may be met with additional fees, a longer waiting period and a slew of headaches. In order to avoid similar penalties, you must have a plan of attack. Implement the following strategies to ease the closing process:
1.) Ask Questions
The acquisition of a property is one of the largest investments an individual can make. For many, it represents the culmination of a life-long achievement. Therefore, it is only logical to assume that each prospective buyer should know what to expect at closing. You must be familiar with every aspect of a transaction prior to the closing. This requires a myriad of questions, each of which should direct you to a successful closing.
Knowing what to expect and communicating with all parties involved in the deal are key to a successful closing, says Neil Garfinkel, a real-estate attorney at Abrams Garfinkel Margolis. Do not be afraid to inquire about a subject property, especially if it is to be your residence for a prolonged period of time.
According to Garfinkel, you should take the time to “talk to the people who are representing you, and tell them you’d like to spend a couple of minutes to discuss what to expect” at closing.
Asking question not only helps you through a relatively tricky process, but it also keeps those that are representing you on track.
2.) Anticipate Mistakes
Closing on a deal is a lengthy and intricate process. The likelihood of a mistake being made increases the longer the transaction takes place. Therefore, assume the responsibility of a proactive buyer. Anticipate human error and you will be better prepared for what is in store.
While it is impossible to anticipate everything, expecting mistakes better prepares you to make more informative decisions as the closing draws near.
3.) Pre-Screen Loan Documents
As perhaps one of the most ambiguous factors of the closing process, loan documents have a way of complicating things. It is critical that you understand every part of the loan. Request a copy of the loan so that you may go over it with your attorney. By law, you have the right to review the closing-settlement statement, or the HUD-1 form, at least 24 hours before closing. Compare that form to the good-faith estimate you received when you applied for the loan.
According to Jeff Richardson, a real estate agent in California, “You should have everything you are going to sign before you sign it. A lot of people don’t do that. When they get to closing, they are nervous, and they just want to sign and get the keys. That’s how people get in trouble.”
At this time, it is important to look for any inconsistencies in the documents. This can include excessively large blank spaces, typos and incorrect numbers and rates. Because of a simple typo, your loan documents may need to be sent back to the lender to be redone. This also reduces the risk of fraud.
4.) Take A Check
With all that happens on closing day, it is easy to forget small details. Upon reviewing the loan documents, be sure to confirm the amount that is due at closing. A typical closing requires the buyer to pay an agreed upon amount. Make sure to have a check at closing that offers the correct amount. To avoid further complications, make sure the check is certified as well.
Using a wire transfer is an option, but it may delay the closing, says Rafael Castellanos, a managing partner at Expert Title Insurance Agency in New York.
In addition to the check, it is also beneficial to provide photo identification and a copy of the homeowners-insurance policy, as well as the good-faith estimate, the HUD-1 statement or both. Having several documents will prevent the possibility of a discrepancy.
5.) Take The Day Off
Buyers are advised to take the day off, as to facilitate a smooth closing. While the process may take as little as thirty minutes, several unexpected problems may arise. Remember, it is important to assume and compensate for human error. It is better that you don’t have to worry about a subsequent event or job that may distract your attention when it needs to be at the closing table.
All too often, people think they can finish a closing during their lunch break. However, this is a bad idea. It does not account for any chance of error. “There may be delays, especially if you are closing at the end of the month,” says Rob Nunziata, president of FBC Mortgage in Orlando, Fla. “Sometimes, people have to sit there for hours and say, ‘I’ve got to get back to work.'”
Do yourself a favor and take the entire day off. Dedicating the most of your time is the least you can do for yourself and the seller.