4 Tips For a Smooth Closing – Part II

3.  MAKE SURE EVERYTHING IS IN WRITING (AND BE SPECIFIC!)

Of course, this seems obvious, but you may be surprised how many details can often be left out of a contract and what problems that can create at and after closing. Remember – your lender and closing attorney have not necessarily been a party to or informed of all of the conversations or agreements between buyers and sellers that are often communicated via their realtors. For example:

• Renters? If there is a renter in a property you are buying/selling, the contract needs to spell out the terms of this transition. Is rent for the month of closing being prorated? How will the renter’s deposit be transferred from the seller to the buyer? (Or, maybe this isn’t necessary if the property is managed by a property management company that is holding the renter’s deposit). If a property management company manages the property, will the buyer be using the same company or a different one?

• All appliances convey? Be sure you spell out exactly which appliances and/or fixtures convey to the buyer at closing – right down to the ceiling fans, chandeliers, mirrors – even the plants, if they matter to either party. (Yes – plants, this has actually become a point of contention in a closing I handled before). Be specific about which appliances convey (does “appliances” include the washer and dryer?). You want to be absolutely certain everyone is on the same page, and the only way to be certain is to make sure it is all in writing. List these things specifically, so that there is no confusion at (or after!) closing, with a moving van sitting in the driveway, as to what stays and what goes.

4.  DON’T MAKE BIG PURCHASES OR APPLY FOR NEW LOANS/CREDIT CARDS

Thinking about opening a Lowe’s credit card to get a new washer and dryer for your new home? Or taking out a loan to buy a new car? Don’t do it! At least not until your loan has actually closed.  Even merely opening a new credit card, without charging anything on it (or charging something to take advantage of a discount and then immediately paying it off), while the loan for your new home is in underwriting, could affect your ability to close your loan. When you apply for a mortgage loan, your credit is monitored right up through the day of closing (and, in many cases, for 14 days after closing, too). While you may be “pre-approved,” your lender is going to question any inquiries into your credit and whether any credit was extended. Remember, approval for your mortgage is based in part on your debt-to-income ratio. If your debt-to-income ratio is too high, you could be turned down for your mortgage. Even more inquiries into your credit, whether or not credit was actually extended to you or used, can trigger delays with your closing while the lender looks into the new inquiries.