I can’t think of a more appropriate topic to end this series of posts I’ve been writing for eCommission than the closing table. After all, we have covered lots of topics related to finding and buying your dream home. But now is not the time to let up. The closing table is a critical and final part of your home purchase.
Make sure you bring every document you received throughout the home-buying process to the closing meeting. This includes the good faith estimate and proof of homeowners insurance. It would also be good to bring a copy of your original purchase contract and inspection incase you need to refer to it for any reason. Last, but not least, don’t forget to bring the check!
Never ever sign any document that you have not first reviewed. After all, people can make mistakes. Because it’s so important to apply proper due diligence at the closing meeting, you should reserve a couple of hours of your time for it.
Don’t schedule your closing on the last day of the month. If something goes wrong and you aren’t able to close that day, everything will get pushed to the top of the next month, meaning that your closing costs will increase due to the accrual of taxes and interest for a full month.
One of the itemized expenses you will see on your closing documents is homeowners insurance. Some states require you to buy homeowners insurance independently and then provide your attorney and the mortgage company with an annual record of payment. Other states, however, expect you to pay your annual homeowners insurance at the closing. In that case, your mortgage company will bill you for it and make the payments on your behalf. A failure to secure homeowners insurance would likely result in the mortgage company refusing to secure the loan. Nobody wants that.
Don’t forget to shop around and look for the best available price for your homeowners insurance. Ask the insurance company what kind of scoring system they use and if you qualify for the best rates and terms. Keep in mind, anything that improves your credit score will also improve your insurance costs.
A final word on Private Mortgage Insurance (PMI). PMI is an insurance policy that lenders require buyers to purchase if their down payment is less than 20 percent of the total purchase price of the home. Buyers need to pay for this insurance until the loan-to-value ratio reaches 80 percent. PMI premiums can be costly and may run between half a percent to one percent of the mortgage total amount each year.
I hope you enjoyed the series I wrote for eCommission based on my book Keep Calm…It’s just Real Estate and that you walked away with some insights that might help you with a future home purchase.