Common Questions Realtors Get About Closing
Questions are always par-for-the-course when going through the home buying process, especially for the first time. Whether youâ€™re unsure about pre-approval, or you have questions about appraisal, things always come up as you get closer and closer to the day when youâ€™re preparing to sign on the dotted line.
The closing process is one step in particular that requires more preparation than many first-time homebuyers may think. As any seasoned homebuyer will tell you, the closing process happens in the blink of an eye, and itâ€™s important to come prepared with some final guidance from your realtor. Itâ€™s also helpful to bring questions to ask the seller at closing so you can walk away feeling confident and prepared for the next steps of homeownership.
Prepare yourself for closing day and avoid some common mistakes first-time homebuyers make with Bluewoodâ€™s helpful guide to what to ask when closing on a house.
What is a Real Estate Closing?
First and foremost, itâ€™s very important to understand where and how the closing step fits into the entire home buying process.
Closing is the final step in the home buying process in which the homebuyer, realtor, and the seller meet to sign the final legal documents and transfer the owner of the home to the buyer. During this meeting, the homebuyer will usually walk away with the keys to their new home and a number of signed documents.
Though this meeting is always relatively brief, itâ€™s not uncommon for first time homebuyers to feel overwhelmed by the rush of information. But the information serves a very important purpose: the new homeowners and sellers need to agree on all of the terms of the transaction and any final real estate closing questions need to be answered before the keys are handed over.
What Should I Bring to a Home Closing?
For homebuyers wondering what to bring to the home closing, the answer is fairly straight forward.
For one, homebuyers need to bring a state-issued photo ID. Some states may require two forms of ID, but for the most part, one form of identification is enough. Ask your realtor prior to the day if youâ€™re unsure.
Along with an ID, the homebuyer will also need to bring all of the paperwork that has been filled out throughout the home buying process, such as proof of insurance. Any additional documents you might need to bring will depend on the specifics of your situation, so be sure to communicate with your realtor prior to that meeting in order to be fully prepared.
Finally, youâ€™ll also bring your cashierâ€™s check for the closing costs. Your down payment will be paid prior to this meeting and your lender can tell you the exact amount youâ€™ll need to put on the cashierâ€™s check. Also, make sure itâ€™s endorsed!
How Much Does Closing Typically Cost?
Closing costs will vary depending on a variety of factors and will most likely be different for every homebuyer. For example, closing costs are approximately 2-5% of the homeâ€™s cost. If the median cost of a home in Texas is $280,000, you can expect to pay between $5,600 and $14,000 in closing costs. Compared to neighboring Oklahoma where the average home is $190,000 and closing costs are a bit less.
Costs are among some of the most common real estate closing questions first time homebuyers ask because final costs can come as a bit of a surprise. Closing costs will vary based on your location, but they will also depend on the price of your home and the parameters of your mortgage.
Some home loans will allow you to pay off closing costs as part of your monthly payments, and sometimes the seller can help cover these costs, too. You should know the agreements of your loan before closing, but final cost negotiations are among some of the important questions to ask the seller at closing.
What to Ask When Closing on a House
You may have some questions to ask the seller at closing, so come prepared with any comments or concerns that you need clarified before closing. Here is our list of recommended real estate closing questions below:
What is Tax Exempt?
When buying a home, there are certain expenses that you may be able to write off at the end of the tax year. For example, veterans and seniors may be eligible for homestead or property tax exemptions based on the state they live in.
Additionally, energy efficient upgrades and even some renovations may be eligible for a tax write off. So be sure to ask your realtor or tax assessor on closing day which home improvements can be written off.
How Can I Eliminate my PMI Payments?
If you are putting down anything less than 20% when youâ€™re buying your home, you will have to pay Private Mortgage Insurance each month. On closing day, make sure you get a rundown of the process to eliminate your monthly PMI payments so you can save money.
Do I Pay Tax Bills or Does My Lender Pay Them?
Another great question to ask at closing on a house is whether or not you, the homeowner, are responsible for paying tax bills or if your lender is responsible for paying them. This will ultimately depend on if you decide to open an escrow account or manage paying those expenses yourself.
Which Parties Should I Follow Up With to Set Up My Monthly Payments?
At closing, itâ€™s important to ask your broker and your lender which parties you need to follow up with in order to set up HOA fee payments and mortgage payments as well as who to send your closing documents to.
Closing is a huge (and final!) step in the home buying process. If youâ€™re getting ready to finalize purchasing your first home, prepping yourself on what to ask at closing on a house will allow you to walk away with keys in hand, feeling fully prepared for homeownership.