Closing day is almost here, and it’s almost time for you to move into your new home. As exciting as this is, buyers will first need to deal with closing day and everything that period entails. Until you’ve closed on the property, there are no guarantees that it’s yours – and that’s why so many buyers strive for the quickest and most hiccup-free closing process possible.
Naturally, you’ll need to organize your finances and ensure that they’re all in-order for closing day. The more financially prepared you are for closing day, the less likely you are to run into any major setbacks or uncertainties.
To start, take a good look at the closing disclosures you’ve received from your lender. This document will include a detailed overview of any expenses that you’ll be required to pay on closing day, as well as anything that will be paid by the seller or lender.
To close on your loan, you’ll be required to pay certain fees to the lender or particular third parties. These are known as closing costs and will generally add up to between 3% – 6% of the final purchase price. Closing costs could include origination, appraisal, application fees, and title insurance, for example.
f you’re a buyer who’s strapped for cash, you might consider taking advantage of lender credits. These are paid by your lender, helping to absorb closing costs on the home. In exchange, you’ll be required to supply a higher interest rate.
Earnest money protects the seller’s interests in case you back out of the deal. You’ll put this money down to demonstrate that you’re serious about the purchase. Until the deal has been completed, these funds remain in an escrow account. After that, they’re applied to the buyer’s closing costs and down payment.
Cash to Close
“Cash to close” refers to the total amount of money that you’ll be required to bring to closing day. This includes closing costs, although it contains various other fees, as well. A deduction may be received if you’ve already made particular payments to the lender.
Some sellers will agree to pay certain closing costs, and these are known as seller concessions. If you’ll be receiving seller concessions, don’t forget to factor this into your financial plans for closing day.
To make closing day more manageable, take advantage of the knowledge and resources at your fingertips. Contact us for additional information.