Settlement (also referred to as closing) is a critical part of the home buying process.
During settlement, ownership of the home gets transferred from the seller to the buyer. This involves a lot of paperwork, a lot of signatures, and usually a lot of questions.
As a home buyer, you can prepare for settlement by understanding what you need to do before the actual day of settlement. This will make the entire home buying process smoother and less stressful.
Some of the items on this list may seem obvious, but I've included them anyway to make the list as complete as possible. Keep in mind that settlement laws and requirements may vary from state to state.
Pre-Settlement Checklist:
* Loan Approval - This is first and foremost, because you can't proceed toward settlement / closing until you get approved for the loan. Once you're approved for the loan, the settlement process is in motion.
* Truth-in-Lending Statement - Shortly after applying for the loan (usually within three business days), the lender will give you a truth-in-lending statement. This statement shows the total estimated cost of the loan, including fees, interest rates and payment terms.
* Set the Date - The time and place of settlement will usually be agreed upon between the lender, the settlement company, and the buyer and seller.
* Transfer Utilities - Call to transfer all applicable utilities (gas, electric, etc.) to your name, effective on the settlement date.
* Hazard Insurance - Most lenders will require hazard and liability insurance, at least up to the loan amount. You need this to satisfy their requirements, but you should also choose a policy that protects your investment and give you peace of mind.
* Final Walk-Through - A day or two before settlement, you will conduct a final walk-through of the house. This is your last chance to view the property before taking ownership of it. Make sure everything is as you remember it (no new damages, all conveyed items present, etc.). Also, if you made the contract contingent upon certain repairs (based on the home inspection), make sure those repairs have been completed.
* Settlement Statement - At least one business day before settlement, you should receive a settlement statement (also referred to as a HUD-1 statement). This document will list all the costs you're required to pay at settlement. Review it carefully. If you find errors or items you don't understand, bring it up with your real estate agent, attorney or settlement agent. Don't let your questions go unanswered!
* Certified Check - In most cases, you will need to bring a certified check with you to settlement to cover all the closing costs. The amount of this check will be based on the settlement statement. Be sure to bring a photo ID with you as well.
Understanding the settlement process will help ensure a smoother home buying process. Be proactive about the items on this list. Don't just wait for them to happen -- make them happen.
* Copyright 2006, Brandon Cornett. You may republish this article if you keep the byline and author's note, and also leave the hyperlinks active.
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