It's closing day on the home you've purchased. Your moving van is packed and ready to go. But the deal isn't done yet. If something goes wrong, and the closing cannot be completed that day, everything could be put on hold. You wouldn't even receive the house keys yet. While you, as the buyer, can't control matters entirely, you can help avoid the frustration of a delayed closing by making sure to take certain documents and other items along.
To help prepare, you might want to create a checklist. What exactly goes on that list will depend on:
- the type of property you're buying, for example, a freestanding home, a condominium, or a co-op
- the terms of your purchase contract
- the terms of your loan, if you are taking out a mortgage, and
- state and local real estate closing rules and customs.
This article lists many of the common last-minute closing requirements. In some places, your real estate sales agent, attorney, or the escrow company (sometimes called the "escrowee") performing the closing will furnish some or all of the suggested items, so you should ask before commencing work to attain these items.
For more general information about your home purchase closing, see Home Buyers: What Happens at the Closing.
Closing Items for All Purchases
At a minimum, or depending on your circumstances, you'll probably need to provide the following:
- Photo identification. Your signature will need to be notarized on various title and loan documents (if you're taking out a loan), so you'll have to prove your identity. Take along your state-issued photo identification, such as a driver's license, to the closing—even if your purchase is to be made solely with cash. A passport will also do.
- Funds. Your attorney or the escrow company will calculate the amount of money you need to bring to the closing. You might want to include a small overage, as a cushion to cover unanticipated closing costs. All but minimum amounts should normally be wired to the escrow company. Do not expect to bring a check, even a certified check, to the closing without confirming that the escrow company will accept it. Also, request the wire from your bank a day or two prior to the closing if you can, and give your bank the date the funds must be received—usually the closing date. Some attorneys and escrow companies ask that the buyer have the funds delivered the day before the closing, so as to avoid delays, particularly if the closing is scheduled early in the morning or the day before a weekend or bank holiday.
- Any separation agreement or divorce order. If you are separated or in the midst of a divorce, a separation agreement or an order from the divorce court could affect your purchase in some states. Ask your attorney or the escrow company for details.
- Any revocable living trust. If you have a revocable living trust and wish to designate your trustee as the property owner, bring a copy of the trust document to the closing. The title insurer will want to examine the it to confirm that the trust can hold property and take out loans if a lender is involved. The escrow company will want to confirm that the proper parties are signing the buyer's documents.
- Documentary or transfer stamps. Some states, counties, and municipalities impose a transfer tax, which is satisfied through the purchase of stamps to be attached to the property deed (the document that transfers the property from seller to buyer). Often, at least one or more of these stamps are the buyer's responsibility to purchase prior to the closing. Ask your attorney, the escrow company, or the state, county, and municipal officials where the property is located whether you must purchase such stamps, and if there are conditions that must be met prior to purchase. For example, you might need the seller's signature on transfer declarations, or the seller might need to allow an inspection of the property, or the seller might need to pay off debts to the state, county, or municipality (such as traffic violations or other tickets and water or sewer charges) before you can purchase the stamps.
For a detailed description of the closing documents you can expect to see, read Home Buyers: What Documents to Expect at Your Close of Escrow.
Closing Items for Purchases Where Buyer Is Taking Out a Loan
In addition to the above, if you are taking out a loan to help finance your home purchase, you'll be responsible for other items. Fortunately, the lender will provide you with a loan commitment that describes the terms of your loan and in most cases includes a list of items needed for the closing. Read this carefully, looking for what you are required to do at, or bring to, the closing.
However, the loan commitment often omits some standard or customary documents, or lists them only in the boilerplate. So, if taking out a loan, you might also need to bring the following for delivery to the lender:
- Homeowners' insurance certificate and paid receipts. All lenders will require you to furnish the certificate for your homeowners insurance, in the greater of the amount necessary to cover the replacement cost of the home or the amount of the loan, and showing the lender as an additional loss payee. You'll also need to show that you've paid the first premium. Lenders are particular about how they are named in the insurance policy, so ask yours to give you the exact language, and furnish it to your insurer. Make sure the insurance commences on the closing date. If purchasing a condominium or co-op unit, the homeowners' association or management company will provide you with a certificate of insurance covering the jointly owned portions of the property, and you'll need to insure your own unit.
- Wind insurance. Your lender might require a wind rider to your homeowners' insurance if the home is located where there is tornado or hurricane activity.
- Flood insurance. The lender will require flood insurance for homes within a national flood hazard area. You might want to look into buying flood insurance even if not required by the lender, as described in Hurricanes and Flood Insurance: What Homeowners Should Know.
- Earthquake insurance. The lender might require earthquake insurance in certain locations where earthquakes are possible, and where the state does not mandate the coverage be part of a regular homeowners insurance policy or provide the insurance from a state pooled fund. If you must buy private earthquake insurance, review the policy carefully, and make sure you have chosen a plan with a deductible that fits your personal financial plan.
- Pest inspection. Some loans require a wood-destroying pest inspection. The rules for Veteran's Administration ("VA") and Federal Housing Administration ("FHA") loans are sometimes less restrictive, so ask your FHA or VA lender what inspections will be required for the particular home.
- Septic letter and/or well letter. If the home you are purchasing does not connect to municipal water and/or sewers, you might need a septic letter from the local health department. If buying with a VA or FHA loan, the letter might need to contain some specific language, which will be available from the lender.
- Judgment or lien release. If you have a judgment against you from a prior lawsuit or debt, you might have to bring a written, signed, and notarized release to the closing. Your attorney or escrow company can help you obtain this.
- Construction lien waivers. If you have contracted for improvements on the property, you might have to bring a contractor's sworn statement and lien waiver to the closing. In some states, contractors get an automatic lien on the property as of the date of the contract for the work.
- Documentary stamps. Some states require the buyer to purchase stamps similar to documentary or transfer stamps (described above) for the mortgage.
If unsure whether you have all these items, or need them, double check with your agent, attorney, or title or escrow company.