The time has finally come. You’re about to seal the deal on your new home in Albuquerque! The keys are nearly in your hands.
As you cross the finish line, here’s what to expect and what you need to know.
What Does “Closing” Mean?
Closing simply means that you sign the final paperwork that gets you the keys to your new home.
The process really begins when you sign a purchase and sale agreement, which specifies the closing date. It usually takes about 4 – 6 weeks from the signing date to closing date. During this time, purchasing funds are held in escrow, where your money is safe until the deal is officially done.
What’s a Closing Disclosure?
A Closing Disclosure, or CD, is provided by the lender at least three days before settlement. The CD discloses you final loan terms and closing costs.
The reason for this step is to make sure there’s no surprises during the final closing. You should let your lender and title company know right away if there’s a significant discrepancy between the Loan Estimate and CD. Depending on what the underlying issue is, the closing has to stop and a new closing disclosure must be sent out with a new three-day review period.
The main things that can’t change between by the time you get the Closing Disclosure is the interest rate and lender fees. Some items can change by only 10% (fees paid to local government to record the mortgage might be one); and others can change without limit, like prepaid interest, because it can’t be predicted at the start of the loan process.
When Will the Final Walk-Through Happen?
Usually within 24 hours of the settlement, you and your agent will do a walk-through of the home, making sure any repair work that the seller agreed to make has been completed.
If any repair work is missed, your agent will contact the listing agent and, in most cases, negotiate to get the seller to compensate you at closing, This will usually be in the form of a personal check for the costs of fixing the problems yourself.
Worst-case scenario: You have to delay closing to resolve problems. In the unlikely event that happens, your agent will help you address the issue.
How Much Will I Pay for Closing Costs?
Closing costs can be frustrating for home buyers, as there can be unexpected surprises.
Costs are split between you and the seller, but as the buyer you’ll cover the lion’s share. You can generally expect your closing costs to be 3% to 4% of the home’s sales price. So, on a $300,000 home, you can pay anywhere from $9,000 to $12,000 in closing costs. (Meanwhile, the seller typically pays closing costs of 1% to 3% of the sales price.)
You can try to predict closing costs with calculators which lets you plug in your mortgage details to get a rough estimate of what your costs will be.
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