After finding a dream home you can afford and doing all the due diligence, the next big step is to close on the house. It involves a lot of paperwork and signing several documents before you can get the keys to your new home. This is why you should familiarize yourself with the closing documents to ensure the closing process goes smoothly.
Below are some of the closing documents you will need.
1. Closing Disclosure document
This document defines all parameters and costs of the mortgage loan transaction. This may include the estimated monthly payments, mortgage costs, and closing costs. Your lender should provide this document at least three business days before the closing day, giving you enough time to check for errors and review the cost of the mortgage.
Although you may have received a Loan Estimate document, it only approximates the costs. However, the Closing Disclosure document will provide you with accurate numbers.
2. Proof of homeowners insurance
Before your mortgage can be approved, you will need to have a homeowners insurance policy. Taking out this policy will help protect you in case your home gets destroyed or damaged. Remember that the policy should meet your lender’s minimum requirements. During closing, you can use the policy’s declarations page as proof of homeowners insurance.
3. Property transfer forms
The type of property transfer forms you sign will depend on the home or property you’re purchasing. However, these forms transfer ownership from the seller to you once you and the seller have signed them during closing. Some essential property transfer forms may include the deed, transfer tax declarations and seller’s affidavit.
Understanding the real estate closing process and the documents to look for will help you prepare appropriately and avoid costly mistakes that could ruin your home ownership dream.