10 Steps to Take Before Closing
So, you’ve chosen a lender to finance your new home (yay!). You’ve basically done everything you have to do now, right?
...wrong! Here are the ten steps you’ll need to take to cross the closing line. (And don’t worry – your loan officer and real estate agent should help you with a lot of these!).
- Lock in your interest rate.
Your mortgage rate isn’t guaranteed until you lock it in. Check your loan estimate to make sure your rate is locked and keep track of the expiration date (typically 30 to 60 days after you lock). If you go past that date to close your home loan, it could cost you extra. - Review your home appraisal.
If your loan requires a home appraisal, you should receive a copy of it before your closing. Look through it with your real estate agent to make sure it’s as accurate as possible. - Provide final mortgage documents.
Lenders typically need the following to prepare your closing documents:- Your most recent paystubs
- Your recent bank statements
- Verbal verification of your employment
- Proof of homeowners insurance for your new home
- Proof that you haven’t opened any new credit
- Don’t change jobs.
Most mortgage closing documents verify your employment right before your closing day. Any changes in your employment, income or how you’re paid could cause big delays, or even result in loan denial. - Don’t make large deposits or open new credit.
Lenders want to verify that your income is legitimate and dependable, which is why unusually large deposits can raise a red flag. If you receive a large housewarming gift from a friend or relative, don’t deposit it until after closing. You also don’t want to make any major charges to your credit cards or open a new line of credit; this may affect your credit score, which could affect closing. - Review your initial closing disclosure.
Federal guidelines require you receive a closing disclosure at least three business days before your closing date. Have your initial loan estimate handy to compare what you were originally quoted with the final figures. As you review the numbers make sure you’re:- Getting credit for any fees you already paid (like for an appraisal or pest inspection)
- Getting lender credits applied to fees for a low- or no-cost mortgage offered by your mortgage company
- Receiving credit for costs the seller agreed to pay
- Receiving your expected interest rate and closing costs
- Asking your loan officer about any discrepancies or unfamiliar charges
- Requesting any changes to the loan amount or interest rate before the next step
- Confirm you are clear to close.
Once all the conditions to your loan have been satisfied, your lender will usually issue a “clear-to-close"" or CTC notice. This means the lender can begin preparing your final closing documents for you to sign at the closing table. - Verify the final amount you need at closing.
Once the lender’s closer completes your closing documents, they will be sent to a title company or attorney to prepare for your signing. Your loan office, an escrow officer or attorney will contact you with the final amount you need to pay. - Review and sign your paperwork.
Your closing may be scheduled at a title company, attorneys office or with a notary at a place of your choosing. Some lenders offer eClosings that allow you to electronically sign some or all of your documents with a laptop or desktop computer. You’ll need some form of identification. Take time to review the paperwork and ask questions about any form you don’t fully understand. - Get your new home keys!
The mortgage closing process is not officially done until the mortgage funds are received, and the loan is recorded on your home in your name. Once that happens, you are officially a homeowner and can get your keys!