Real estate agents not only help their clients find the perfect home, they also guide them through the purchase process. It can take up to 45 days to close on a home purchase, and during this time, your buyer will have their home inspection and await the appraisal and termite and moisture report. As the closing date inches closer, you should advise your clients on pre-closing procedures.
Buyers also work closely with their mortgage lenders through the purchase process, and their loan officers will offer tips and advice. Some information can slip through the cracks, so there’s no harm in re-emphasizing important points to ensure a smooth closing with no delays.
Here are a few pre-closing tips to share with your buyers.
1. Buyer should notify lender of their homeowner’s insurance provider
First-time homebuyers don’t always understand how to navigate the process. Remind them to select a company for their homeowner’s insurance and forward a copy of the policy to their mortgage lender in a timely manner. You can go a step further and offer recommendations. If you have working relationships with insurance companies, give your clients their contact information. However, you should also encourage buyers to shop around and get multiple quotes.
2. Keep a copy of the inspection report
Buying a home is an overwhelming process. Between packing up their current home and preparing for the move, your buyers could misplace important documents, including the home inspection report. The home inspection report highlights issues with the property, and sellers typically agree to make needed repairs prior to closing.
Inform buyers of the importance of keeping this report close by. During the final walk-through, they’ll refer back to this report when inspecting the house to see whether the seller completed the agreed upon repairs.
3. Schedule utility transfers
Before closing, buyers should also call local utility companies to have the home’s utilities transferred into their name. This includes the electricity, water and gas. This transfer should take place on the day of closing, and buyers should schedule transfers at least two weeks before closing.
To assist buyers, you can create a document with the names and customer service numbers of local utility providers. Keep this document in your files and pass the information to your buyers.
4. Ask about the procedure for transferring funds
Buying a house is expensive, and unless your buyer is getting a VA or a USDA home loan, they’ll have cash due at closing for their down payment and closing costs. Regardless of whether they’re closing at a title company or a real estate attorney’s office, buyers need to contact the closing agent ahead of time for information on how to pay cash due at closing.
Most closing agents do not accept personal checks, but they will accept a cashier’s check or a certified check. In some cases, closing agents will allow your clients to wire funds directly to their offices.
5. Review the Closing Disclosure form
Inform your buyers to keep an open eye for the Closing Disclosure form, which is the final document they’ll receive before closing. They received a Loan Estimate early in the process, which estimated their costs. The Closing Disclosure form has details about their final loan terms, including the interest rate, the sale price, other terms, as well as cash needed to close.
Encourage your buyers to compare the costs and terms on the Closing Disclosure with their original Loan Estimate. If they have any questions, they should speak with their mortgage lender for clarification. They'll receive this document at least three business days before closing. Depending on the mortgage lender, it might arrive via email.
6. Don’t spend large sums of money
Buyers are understandably excited to purchase a home, and some begin shopping for furniture prior to closing. Making inexpensive purchases here and there isn't a big deal, but you should advise buyers to avoid large purchases before closing.
Using a credit card can increase their debt and raise questions when the lender checks their credit a final time before closing, more so if there’s a substantial debt increase. Spending a large sum can even cause problems when your buyers pay with cash. They don’t learn their final mortgage costs until three days prior to closing. If your buyer goes on a shopping spree and overspends, there’s the risk of not having enough cash to close.