Hassle-Free Home Closing Experience Cambridge MA
Hassle-Free Home Closing Experience
After going through all the work needed to buy or sell property, there is one final step: closing. Closing can be an arduous process, so it’s best to be prepared going in. Unfortunately, no amount of preparation can guarantee you an easy closing experience. It is important that you be ready for unexpected events to occur. Experts recommend the following steps to ensure your closing goes as well as possible.
1. Get Ready Ahead of Time
There are a ton of fees involved in any real estate transaction which must be paid by either the buyer or seller. You should know something about these fees going in and be familiar with common closing costs. The responsibility for closing costs varies from state to state, even county to county. You can find out online whether the fees in your area are paid by the buyer, seller, or both.
2. Shop Around
You should begin to think about your closing costs long before the actual closing. Compare closing costs in your area to figure out how much you are going to have to pay in closing. When looking a home loan, pay attention to the fees that will be charged to you by the lender. Traditional mortgages do not include closing costs in the amount borrowed.
3. Budget for Closing Costs
Experts agree on the astonishing difficulty of nailing down an exact sum for closing costs at the beginning of escrow, which is why it is recommended that you be certain to set aside enough fees to cover any possible costs that might arise. This usually means an amount between three and seven percent of the total purchase price for the property. Lenders are required by law to give a “Good Faith Estimate” of closing costs before issuing a loan, but actual closing costs vary wildly from lenders’ estimates.
4. Be Forthcoming
Don’t hide any blemishes on your credit record from your lender. Giving the lender all of the information requested will ensure that the rate you were quoted at the start of escrow does not change later.
5. Do Your Homework
Closing involves a huge amount of paperwork. You will be handed paper after paper and be instructed to sign. Don’t be rushed by this process. Make sure that you understand everything you are signing before signing it by asking for copies of each document you will have to sign in advance and studying them. Any questions you have can be answered before closing begins. You can even have an attorney review the documents for you and give advice.
Make sure that there will be no problems, often referred to as “clouds,” over your title to the property. Review the conditions in your purchase agreement and lender’s requirements, insuring that both sides in the transaction have done what they needed to do. Doing your homework before closing allows you to arrive at the closing confident and prepared for anything.
6. Protect Yourself
Conditions for closing are laid out in the real estate purchase agreement. Pay attention when your purchase agreement is being drafted, for it is a binding contract. All contingencies should be written in the purchase agreement so that it can be certain that they are fulfilled prior to closing. An example of such a contingency is one that allows the buyer to back out of the deal if the property is assessed at a level far below the purchase price, causing a lender to refuse to grant the mortgage the buyer needs to buy the property.
7. Know What’s Negotiable, and What’s Not
The fees having to do with the lender are usually negotiable. Lenders will recommend particular companies for title insurance, home warranty, or flood insurance; but you do not have to follow these recommendations. You can (and should) shop around for the best deals you can get on all of these items. The Title Wizard is a helpful tool for finding the best title insurance rates. Most other fees are not negotiable and it is a waste of your time and energy to try to affect any sort of changes in them.
8. Know What You’re Paying For
Knowing how difficult it is for someone buying or selling property to walk away, some lenders will slip dubious fees into their closing costs. Often called “garbage” or “junk” fees, they can include things like “document preparation fees” and “warehousing fees.” Lenders often also mark up costs for credit checks up to 50%. Be wary of such fees when going into closing. Even better, prepare yourself beforehand by researching lenders and choosing one that does not charge junk fees.
9. What to Check
a. the name on the deed of trust and grant deed, including middle initials
b. the legal description of the property
c. all dates, including the date escrow closes
d. loan amounts
e. proration and payoff amounts
It can be extraordinarily helpful to hire an attorney during escrow. Buying or selling a property is one of the biggest transactions of your life and having someone around to guide you through the process, with all its legal ramifications, can be a huge benefit.
10. Be Practical
Don’t jeopardize your purchase or sale with an argument over closing costs. An extreme buyer’s or seller’s market may allow you to shift some of the costs to someone desperate to buy or sell a property, but don’t count on it.
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