How To Avoid Surprises At Closing Time

Buying your own home can be a dream come true and one of the best investments you can make. However getting surprised at the closing table by having to bring more cash than you expected or ending up with a higher interest rate on your home loan and larger monthly payments can definitely ruin your day. So how can you avoid unpleasant last minute surprises?

While most of the bad apples have been run out of the business, bait and switch tactics by mortgage lenders have always been the biggest problem when it comes to closing. With the mortgage business more competitive than ever some lenders will tell you anything to get your business only to surprise you at closing with high interest rates and large fees. They know that closings are stressful and that you won’t want to lose your earnest money deposit by not signing the closing papers. So avoid the urge to jump on the deal with the lowest rates and costs, especially if they are far lower than any other quotes you have received. Ask for referrals from friends and family as well as your Realtor or attorney and check them out a little before you sign any paperwork. By law you must receive a Good Faith Estimate of all costs and fees associated with your mortgage loan within 3 days of your application. This will also show how much you will need to bring to the closing. If there are any changes, which there often are your lender must also provide those to you in writing as well. You should also make sure that you lock in your interest rate well before closing and ensure that you get a written lock confirmation directly from the lender.

Also request that you are sent a copy of the HUD settlement statement by the title company or attorney performing the closing prior to going to the closing. This will prevent you from being pressured into signing anything at the last minute. If you notice any issues with the HUD make sure to call your lender or the title agent right away and demand they are fixed before you go to the closing.

As a rule you should also always expect things to cost a little more than you planned. So do not stretch yourself too thin and try to buy the absolutely most expensive home you think you can afford as you may end up with additional monthly expenses for extra insurance or association fees. Though make sure you fully understand ALL fees and payments involved. Don’t be afraid to ask questions. A reputable real estate professional will be more than happy to answer any questions you have and make sure you are completely comfortable.

Finally make sure that you do your walk through of the home prior to closing and ensure that any repairs that were supposed to have been done are completed. If not you can use this as a bargaining tool at closing against any additional costs you were not prepared for.