The closing can feel like an almost mythical moment in the home buying process. It's that moment where, after all the searching, negotiating and number crunching, you finally sit down, sign paperwork and are handed the keys. It is also the easiest part of the home buying process, unless something goes wrong, in which case it can become the hardest part.
No need to panic. It probably will be a piece of cake. Your real estate agent, assuming you have one, will be holding your hand throughout the process (metaphorically, of course; if a real estate agent really held your hand, that would be weird). Still, things can go wrong. If you really want to be prepared, it can't hurt to know what's in store.
Setting the scene. You'll likely be in some cushy meeting room in a building or office park, and you'll be surrounded by a lot of professionals, who are all making money, thanks to this sizable contribution of yours to the economy.
Some of those professionals will likely include your real estate agent as well as perhaps a closing attorney, the title closer and the lender, says Matt Hackett, operations and underwriting manager at Equity Now, a direct mortgage lender based in New York City.
Hackett suggests that if you have a co-borrower, like a spouse, you sit next to each other and not across the table.
"it will speed the process to sit in a way in which it will be easy to pass papers around," he explains.
You can tell that he has been to this rodeo a few times.
And if you know any hand-stretching exercises, this would be a good time to do them.
"Expect a lot of paperwork to be passed around the table for multiple people to sign," Hackett says.
Keep TRID in mind. TRID stands for TILA-RESPA Integrated Disclosure Rule, which became the law the land on October 3. It ensures you'll be given forms designed to make it clear to you, the homeowner, exactly what you're spending to buy your house, and you'll have three days to look everything over
Before the new rules, buyers often wouldn't see their closing statement until the closing, or perhaps the day before, says Bill Golden, an independent real estate agent with RE/Max Metro Atlanta Countryside.
"If there are any significant changes to the loan terms, as described by the TRID rules, that will trigger another new three-business-day waiting period," Golden says.
Arguably, this is a good thing. Nobody wants to feel pressured into buying a house with terms they feel they never would have signed off on, had they realized exactly what the terms were. But an unexpected three-day business waiting period can have an unintended side effect.
"This can be tricky when folks have movers lined up based on their closing date, and even more so if there are multiple transactions contingent on one another," Golden says.
He also warns that while it may sound like it's all in the lender's court, you could be the one to cause the delays.
"It's imperative that buyers get all required documents and information to their lenders as soon as possible. Lenders can't make things happen on time if they haven't received everything they need from you," Golden says.
What sort of things? "A colleague of mine just told me about a deal in which the buyer dragged their feet in obtaining homeowners insurance, which is required for the lender to sign off on the loan," Golden says. "This triggered an additional three-day waiting period, which was not happy news to all others involved in the transaction."
A lot of real estate agents aren't too thrilled with TRID. On Inman.com, a real estate website for real estate agents and brokers, one agent wrote that TRID stands for "The Reason I Drink."
Golden admits that it has been a pain for agents, homebuyers and sellers, but he says, "I think in the end, it will be a much better thing for consumers. Unfortunately, it involves growing pains and getting used to doing business in a slightly different way. We all balked at the Internet's role in real estate when it first appeared ... It just takes time to work out the kinks and get used to it."
Don't buy anything expensive before the closing. You have just managed to get a lender to agree to loan you the money to buy a house. In this day and age of relatively tight credit, that's no small feat. Don't blow it now by suggesting that the lender made a mistake.
Yes, you want to buy furniture. Yes, you may want a brand new car to go in the driveway. Yes, you need a lawn mower, a snow blower, a rake , and you have an urge to clean out most of the aisles in your nearest home improvement store.
But you don't need it yet. Really, you don't.
"Never make any new financing decisions before your purchase," warns John Michael Grafft, a real estate agent in Chicago.
"No rented furniture and no new cars. I once lost a closing because they pulled his credit on the final day, and he had just done both," Grafft says. "Terrible decision."
Even if you know you can afford it, and your credit is stellar -- that Grafft's client was renting furniture suggests he couldn't, and it wasn't -- don't risk it. Sign the papers at the closing, get the keys and then if you want, whip out your credit card.
Bring proper identification. You don't have to worry about bringing along a bunch of forms.
"For the most part, the lender and title company or settlement agent will bring all the necessary paperwork," says Naveed Shah, a real estate agent with Keller Williams Realty in McLean, Virginia.
Most of that paperwork you'll go over with your agent or lender before the closing, says Shah, who encourages homebuyers to ask a lot of questions, if there are things you don't understand.
"This is a huge commitment, and there's no such thing as a stupid question," he says.
But there is one very important piece of documentation that only you can bring, Shah says, and you can't buy a house without it -- your driver's license, or some sort of government-issued photo documentation proving who you are.
"I've seen settlements delayed because someone has to drive home and get their ID," he says.