7 Steps to a Stress-Free Home Closing

This cheat sheet helps you do your homework, so you know what youre signing when you close the sale of your home.

Youve already cleared several hurdles by finding the right home, negotiating the best price, and getting approved for a mortgage. The last obstacle on your homebuying track is the closing, which can be both tedious and tense. By knowing what to expect and doing some legwork, you can smoothly put your closing behind you. These seven steps will guide you.

1. Set a Closing Date

Ask your title company to set a closing date and time that meshes with the end of your lease or the sale of your existing home. Dont want to skip work? Ask for an evening or weekend closing. Tight on cash? Schedule your closing for the end of the month. Thats when youll pay the least amount of interest at the closing table.

2. Gather Your Funds

Buyers usually have to bring money to the closing. Ask the title company what forms of payment it accepts. Chances are you cant use a personal check.

If you have to move money into your bank account to pay your closing costs, do so a week ahead to avoid last-minute problems. If the title company requires the funds in the form of a cashiers check, stop by the bank a few days before closing to pick it up.

3. Purchase Title Insurance

If youre getting a mortgage, you have to buy a title insurance policy. Think it protects you against problems with the title of your home? Nope, it protects the lender in case the sellers really didnt own the home or someone else had a claim on it.

To cover yourself, you can buy an owners title policy from the same insurance company that sells you the lenders title policy. Or, shop online at Closing.com, EasyTitleQuote.com, or FreeTitleQuote.com. An owners title policy insures you against losses from fraudulent claims against your ownership and errors in earlier sales. In some areas, sellers traditionally pay for the buyers title policy.

Whether or not you get the owners policy, if you buy a title policy from the same company that issued the prior owners title insurance, you can ask for a reissue discount or bring-down rate. Theres a discount because the title company only has to check the records filed since that prior owner bought the home, not since the dawn of time.

4. Line Up Homeowners Insurance

Get quotes and compare policies to be sure coverage will start by your closing date. An annual policy should run 500 to 1,000, depending on your homes size, age, and amenities. To get a lower premium, opt for a high deductible or buy your homeowners insurance from the same company that insures your car.

If you live in an area where natural disasters occur, like earthquakes, floods, or hurricanes, youll need separate insurance to protect your home from those hazards.

5. Review Your Good Faith Estimate and HUD-1 Settlement Sheet

Your lender already gave you a Good Faith Estimate (GFE) that showed your estimated closing fees. Some of the fees on your GFE cant change and others can rise by 10%. Before you go to the closing, compare the numbers on your GFE with the numbers on your HUD-1 settlement statement. Question your loan officer about any fees that increased.

6. Do a Walk-Through

Schedule an appointment to walk through the home one last time just before your closing.

• Make sure repairs you requested have been made.

• Look for major changes since you last viewed the property.

• See if the sellers left everything they promised to leave.

• Check to see that the sellers took all their personal belongings.

• Test electronics and appliances to ensure theyre still working.

• Turn on the HVAC and hot water. Are they functioning right?

• Walk the yard to be sure no plants or shrubs have been removed.

7. Resolve Issues Identified in Your Walk-Through

If your walk-through uncovers problems:

1. Delay the closing until the seller corrects them (if your state allows it). But thats often not feasible because your lease is probably over and youve already scheduled movers.

2. Negotiate a discount to your sales price to cover the cost of the work needed. If the air conditioning is on the fritz and a contractor says the repair will cost 500, ask that the sales price be reduced by that amount. If you make that request at closing, however, be ready for a delay while the title company redoes the paperwork.

3. Have the title company hold a portion of the sellers proceeds in escrow until the dispute is resolved. Once that happens, the funds will be released to you or the seller, depending on the outcome.

G.M. Filisko is an attorney and award-winning writer who has endured several property closings, but the easiest was done through the mail. A frequent contributor to many national publications including Bankrate.com, REALTOR(R) Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.