Mistakes to Avoid at Closing

Buying a home is a process – one filled with many steps. From negotiations, appraisals, inspections, and everything else that goes into a real estate transaction, once everything is signed off, it’s time for closing. The final step of the process, mistakes at closing can be costly. Below are some of the most common closing mistakes and tips on how to avoid them (but be aware that closing is different from state to state and some of the items below may not pertain to your specific real estate transaction).

Not Reviewing the Closing Disclosure Carefully

Mistake: Failing to review the Closing Disclosure (CD) thoroughly can result in unnoticed errors or unexpected costs.

Solution: Review the CD in detail and compare it to the Loan Estimate you received. Ensure all terms and costs match what you agreed upon. If you spot discrepancies, address them immediately with your lender.

Not Having Proper Documentation Ready

Mistake: Missing or incomplete documents can delay the closing process.

Solution: Prepare all required documents in advance, including identification, proof of insurance, and any additional documentation your lender or closing agent has requested.

Failing to Conduct a Final Walkthrough

Mistake: Skipping the final walkthrough can mean discovering issues with the property after closing.

Solution: Conduct a thorough final walkthrough 24 hours before closing to ensure the property is in the agreed-upon condition and that any repairs have been made.

Not Understanding the Terms of the Loan

Mistake: Not fully understanding the loan terms can lead to future financial strain.

Solution: Ask your lender to explain any terms you don’t understand and ensure you are comfortable with the interest rate, monthly payments, and overall loan structure.

Underestimating Closing Costs

Mistake: Being unprepared for the total amount of closing costs can cause financial stress.

Solution: Request a detailed estimate of closing costs early in the process and budget accordingly. Have funds readily available for closing.

Making Major Financial Changes Before Closing

Mistake: Large purchases, changing jobs, or opening new credit accounts before closing can affect your loan approval.

Solution: Avoid making any significant financial changes or purchases before closing. Maintain steady employment and keep your credit profile stable.

Not Reading the Fine Print

Mistake: Overlooking important details in the closing documents can lead to future legal or financial issues.

Solution: Take the time to read and understand all documents before signing. If necessary, seek clarification from your attorney or real estate agent.

Assuming Title Insurance Isn’t Necessary

Mistake: Skipping title insurance can expose you to legal claims against your ownership.

Solution: Purchase title insurance to protect yourself from potential title disputes or liens against the property.

Not Asking Questions

Mistake: Not asking questions about unclear terms or processes can lead to misunderstandings and mistakes.

Solution: Don’t hesitate to ask your real estate agent, attorney, or lender to explain anything you don’t understand. It’s better to ask questions now than face issues later.

Missing the Closing Appointment

Mistake: Failing to attend the closing appointment can delay the process and potentially void the agreement.

Solution: Mark the closing date on your calendar and make arrangements to be there. If you can’t attend in person, arrange for a power of attorney or remote closing.

Not Verifying Seller Concessions

Mistake: Assuming seller concessions will be applied as expected can lead to financial shortfalls.

Solution: Verify that all agreed-upon seller concessions, such as covering certain closing costs or repairs, are documented and reflected in the final paperwork.

Closing can come with a multitude of feelings – don’t get bogged down by fear or stress. To ensure the process is as smooth as possible, have all your bases covered beforehand by working with your agent to ensure every item and document is ready to go. I’m happy to be a valuable resource for your real estate journey. If you’re looking for a home, don’t hesitate to reach out. You can find the most up-to-date listings on the local market on my website, and don’t hesitate to send me your questions. I’m here to help.