Mortgage Comparisons, Pre-Approval, More: Steps to an Easy Closing
The process of becoming a homeowner doesn’t have to be overly difficult. As you speak with lenders and home mortgage brokers, remember the following steps that should be taken on your way to closing… - Compare mortgages. Don’t simply accept the first mortgage option presented to you by your bank, real estate agent or broker. Spend time comparing offers to be sure you get a plan that fits. There are several variables to consider including the type of mortgage, the term and the lender.
- Get pre-approved. Receiving pre-approval for a mortgage enables you to know exactly how much you can afford to spend. It allows you to make a more aggressive offer, present the seller with more attractive terms and negotiate a better price. It also helps prevent you from losing out to another purchaser who already has financing arranged.
- Reserve funds for closing. In addition to your down payment, you will need to reserve funds for closing costs. Depending on the type of mortgage and your location, these costs can range from 2 percent to 6 percent of the loan, must be paid in cash (certified check) at closing and cannot be borrowed funds.
- Hire a home inspector. You should always check the condition of the home you’re purchasing to be sure the it is structurally sound. For that assessment, you should hire a home inspection company (preferably one belonging to a reputable association or that is licensed to practice engineering) and get a detailed written report. Attend the inspection so you can ask questions and discuss concerns.
- Search the title. Your lawyer should search the title records to make sure you’re buying the house from its legal owner and there are no liens (claims on the property as security for money owed), overdue special assessments or other claims or outstanding restrictive covenants filed on record, which would adversely affect the marketability or value of title.
- Obtain home insurance. Another key part of the financing process is obtaining home insurance. Your mortgage lender will require proof of a valid homeowners insurance policy, secured before closing. This policy will protect your investment as well as the lender’s.
- Obtain a copy of the settlement statement. Before closing, obtain a copy of the settlement statement. It indicates the total amount of funds you will need at closing to cover the balance owed on the property and other disbursements. It also gives you a chance to iron out any possible discrepancies. You’ll then be prepared at settlement to pay the outstanding balance so the title can be smoothly transferred over into your name.
- Avoid closing at the end of the month. The end of the month and the end of the year are both very busy times for closing agents and mortgage lenders. Avoiding these times means you’re likely to get more personal attention; there will be less chance of an error being made.
SOURCE: Lending Tree