What Should I Bring? (Other than Champagne?)
At the closing you should have:
- A government-issued photo ID
- A copy of the ratified sales contract
- A homeowner’s insurance certificate
- Proof of flood insurance, if you’re buying a home in a flood zone
- A cashier’s check, or proof of wire transfer, to cover the remainder of the down payment and your closing costs
Also, talk to your attorney about anything else you might need to bring depending on your state or personal circumstances (such as a separation or divorce decree, should your relationship status affect the closing).
What Is Title Insurance and Why Do I Need It?
Every lender requires borrowers to purchase title insurance — a policy that protects you and the lender from outside claims of ownership of the property. Wait, you may be asking, some random person could show up and claim they own the house? Sounds crazy, but it happens.
Let’s say a previous owner didn’t pay all of their property taxes. Because those taxes remain against the property, the taxing entity could potentially take your home if you don’t have a “clean” title. Title insurance also protects you from ownership claims over liens, fraudulent claims from previous owners, clerical problems in courthouse documents, or forged signatures.
The title company will perform a comprehensive search of deeds, wills, trusts, and public records to trace the property’s history and verify that you’re becoming the rightful sole owner of the property.
Typically, lenders have a preferred title company they work with, but it’s ultimately the buyer’s decision as to which title company to use. Your agent could offer a few referrals.
Title insurance comes in two forms:
- Lender’s title insurance, which (no surprise) protects the lender. It’s required.
- Owner’s title insurance, which protects you. It’s optional but recommended because it covers your interest in the property. If the insurance company loses a battle over the title in the future but you purchased owner’s title insurance, you’re fully protected. Owner’s title insurance will also cover your legal fees if you have to defend your ownership rights in court.
Unlike most insurance policies, such as homeowner’s insurance, car insurance, and life insurance, title insurance is paid as a one-time fee at closing. The average cost of title insurance is about $544 for the lender’s policy and about $830 for the homeowner’s policy, according to ValuePenguin data. However, costs can vary significantly depending on the home you’re buying, where it’s located, and how much legwork the title company has to perform.
What If There are Last-Minute Issues? Should I Panic?
For your loan to be approved, it has to go through underwriting. The underwriter’s job is to validate all of your financials — confirming that your income, credit, and debt haven’t changed since you were pre-approved for the loan — as well as to review the property’s characteristics and appraisal. If everything checks out, your mortgage will be approved.
If something goes wrong during underwriting though, you’ll have to address the problem before you can close on the home. Let’s say your credit score dropped because you recently purchased a car with an auto loan, or maxed out your credit cards. This isn’t necessarily dire, but you may need to delay closing as you work with your lender to take steps to raise your score. (Also, for that reason, it’s a good idea to hold off on big purchases, avoid overusing a credit line, and doing really anything that could result in a credit inquiry until after the closing.)
OK — Can I Celebrate Now?
If you’ve made it through close … YES! Once you’ve climbed that mountain of paperwork and have those keys in your hands, you now officially, finally own a home.
Congratulations! You put in a lot of hard work — including to build relationships with your agent, your lender, and other experts along the way.