What to Do Before Closing on a House

Preparing for a home closing involves a series of steps to ensure a smooth transfer of property ownership. Proactive engagement in these preparations helps prevent last-minute complications and ensures all financial and legal obligations are met. This approach to the pre-closing period helps protect your investment and supports a confident transition into homeownership.

Securing Your Financing and Funds

Finalizing your mortgage loan requires attention to detail. Lenders often request additional documentation, such as updated pay stubs or bank statements, for their final underwriting review. Your credit profile may undergo a soft inquiry to confirm no significant changes since your initial application.

Understanding closing costs is also important, as these are expenses beyond the down payment that buyers incur. These costs typically range from 2% to 5% of the home’s purchase price, encompassing various fees. Common charges include lender fees, such as loan origination fees (up to 1% of the loan amount), appraisal fees, title insurance premiums, and escrow costs for property taxes and homeowner’s insurance.

The Closing Disclosure (CD) is a five-page form provided by your lender at least three business days before closing. This document outlines the final terms and costs of your mortgage loan, including the loan amount, interest rate, monthly payment breakdown, and all closing costs. Compare the CD against the initial Loan Estimate you received, checking for any discrepancies in fees, interest rates, or loan terms. Significant changes, such as an increase in the annual percentage rate (APR) by more than 0.125% for fixed-rate loans or the addition of a prepayment penalty, trigger a new three-business-day review period.

Arrange the transfer of funds for your down payment and closing costs to avoid fraud. Wire transfers are a common and efficient method for large sums. Obtain wiring instructions directly from the title company or closing agent and verify them verbally using a trusted phone number, not one provided in an email. Alternatively, a cashier’s check may be required, obtained from your bank and made out to the correct party. Schedule wire transfers at least one to two business days before closing to ensure funds arrive on time, accounting for bank processing times and potential holidays.

Conducting Property and Title Due Diligence

A home inspection provides an evaluation of the property’s condition. A qualified inspector examines structural integrity, major systems like HVAC, plumbing, and electrical, and identifies potential issues such as water damage, mold, or pest infestations. Reviewing the inspection report allows you to understand any deficiencies and determine if repairs are needed or if a credit from the seller is appropriate. This report serves as a basis for negotiating with the seller for necessary fixes or financial concessions before closing.

The home appraisal process verifies the property’s market value for the lender. A licensed appraiser conducts an objective assessment, ordered by your lender after your offer is accepted. The appraiser evaluates the home’s condition, size, features, and location, comparing it to recently sold properties in the area. The appraisal report confirms whether the home’s value supports the loan amount, as lenders will not finance more than the appraised value.

A title search examines public records related to the property’s ownership history. This identifies any existing claims, liens, easements, or encumbrances that could affect your ownership rights. Common issues include unpaid property taxes, contractor liens, previous mortgages, or unknown heirs with a claim to the property. The title search ensures the seller has the legal right to transfer clear ownership of the property to you.

Following the title search, obtaining title insurance protects against unforeseen issues with the property’s title that may emerge after closing. There are two main types: a lender’s policy, required by your mortgage lender to protect their investment, and an owner’s policy, which protects your equity as the homeowner. The owner’s policy covers financial losses and legal fees if a challenge to your ownership arises due to past errors, fraud, or undisclosed claims. While the lender’s policy is mandatory, the owner’s policy, though often optional, offers long-term security.

Arranging Essential Services and Protection

Securing homeowners insurance is a prerequisite for closing, as mortgage lenders require proof of coverage to protect their financial interest in the property. This insurance covers the dwelling, personal property, and liability, safeguarding against perils such as fire, wind, theft, and vandalism. Lenders mandate coverage equal to at least 100% of the home’s replacement cost, ensuring the property can be rebuilt if destroyed. Compare quotes from various providers to find a policy that meets both lender requirements and your personal coverage needs, ensuring the policy is bound and effective by the closing date.

Arrange for utility services to be active in your new home by the closing date. This includes contacting providers for electricity, water, gas, and trash collection to set up new accounts or transfer existing ones into your name. Scheduling these services in advance prevents interruptions and ensures your home is functional from day one of ownership. Internet and cable services should also be scheduled to align with your move-in timeline.

Submit a change of address with the postal service to ensure mail is forwarded to your new residence. This helps you receive important documents, bills, and personal correspondence without delay. Update your address with banks, credit card companies, and other service providers to streamline your transition.

Final Verification and Documentation

The final walkthrough is your last opportunity to inspect the property before signing the closing documents. This inspection occurs within 24 hours of closing and confirms the home is in the agreed-upon condition. During this visit, verify that any negotiated repairs have been completed and that all systems, such as plumbing, electrical, and HVAC, are functioning properly. Ensure the seller’s personal belongings have been removed, leaving the property clean and ready for occupancy. If any issues are discovered, communicate them immediately to your real estate agent to determine the appropriate course of action, which could range from a negotiated credit to a delay in closing.

Review the final Closing Disclosure (CD) at least three business days before closing. This document provides the financial breakdown of your transaction, including the exact amount of funds you will need to bring to closing. Compare every line item on the CD with your last Loan Estimate, checking for any changes in loan terms, fees, or cash-to-close figures. Any discrepancies, even minor ones like misspelled names, must be addressed with your lender or closing agent immediately, as they could cause complications or delays if not resolved prior to the closing appointment.

Gather all necessary documentation and identification for the closing appointment. You will need a valid government-issued photo identification, such as a driver’s license or passport, as your signature on various legal documents will need to be notarized. If wiring funds, bring confirmation of the wire transfer; otherwise, a cashier’s check for the exact “cash to close” amount will be required. Proof of homeowners insurance, the declarations page, must also be presented. Bring your personal checkbook for any minor, unexpected fees that may arise.