How to save $1,000 at closing
💡 What is closing?
Closing is the final step where you become the legal owner of the property! At closing, your escrow agent will send all the funds to the seller, officially transfer ownership to you, and close the escrow account.
Once you have removed all of the contingencies in the real estate purchase contract (inspection, appraisal, and loan), you are ready to hold the closing.
At this point, you’ll be working with the loan closer at the lender and the escrow agent at the title company to make sure the final numbers are correct before you wire the remainder of the down payment and sign the docs. Here are the steps I took to get to closing.
Here are the key steps I took during the closing process last year.
- Set closing date
- Get preclosing statement
- Check preclosing statement
- Fix mistakes
- Final walkthrough
- Wire funds
- Sign docs
- Celebrate
1. Set closing date
You don’t have to close on that exact target date, but it’s helpful to have a deadline for everyone to work towards.
This is an example where our real estate agent reached out to the lender to set a target date.
💡 Home 101 Tip
This is the biggest purchase of your life but it's just a job for the loan, escrow, and real estate agents. Don't be shy about pushing things forward. A real estate agent isn't paid until closing, so you bet they are pushing to close ASAP.
2. Get preclosing statement
💡 What is a preclosing statement?
A preclosing statement (aka prelminary closing statement or preliminary settlement statement) outlines the estimated financial details of the sale, allowing the buyer and seller to review the costs, concessions, and cash to close.
The lender provides the preclosing statement, so I started this email chain asking Michael (loan closer at the lender) to circulate a draft.
There are a lot of different people that need to check the preclosing statement, so I also copied Roshon (escrow agent at the title company) and Jason (real estate agent).
3. Check preclosing statement
This is where you can double check the numbers are correct and also save some money. These are some questions I will check:
- If you negotiated a price reduction after inspections, is that correct?
- If you negotiated a seller credit after inspections, is that listed?
- Is the initial deposit you already provided right?
Here are some tips on how you can save money:
- Mobile Signing Fee - this is a $200 fee just for sending a notary to your current home to sign the documents. If you go into the title company's office, you don't have to pay this. Use the money on a celebratory dinner instead!
- Home Warranty - this is a $700 annual fee that covers some problems in your home but I honestly forgot I even had it. You could get this later if you want it.
4. Fix mistakes
Here is an example of a mistake we found. The contract had a seller credit of $16k to pay for our closing costs, but our closing costs were only $13k. As a result, we could only have a $13k seller credit to offset our closing costs. To cover the remainder, we lowered the purchase price by $3k.
The next day, we had to sign an additional addendum to paper the change to seller credit and purchase price.
5. Final walkthrough
Ask the seller's agent for a final walkthrough as close to the closing date as possible. This minimizes the chance of any issues arising between the walkthrough and the closing.
If the seller agreed to any repairs during the inspection process, make sure those repairs were made.
Test the locks on all the doors and the garage door openers.
For any minor issues, decide if you can live with the minor issues or if you want them fixed before closing. In our case, we wanted a remote for the gas fireplace because it had been lost.
6. Wire funds
Once you have the final preclosing statement, you know how much money you need to wire to the escrow agent in order to close.
Go to your bank and wire the funds to the escrow agent. The escrow agent will give you the wire instructions. Triple check your wire instructions so you don't accidentally wire your down payment to someone else.
Once you send the wire, email the escrow agent to confirm receipt.
💡 Home 101 Tip
You don't have to wire the funds on the exact same day you close. Depending on your bank, wires can stop processing early in the afternoon. For example, my bank stopped proessing wires at 3pm ET, which meant I had to initiate the wire before noon in California.
7. Sign docs
Now you need to sign the documents in front of a notary.
The escrow agent can send a notary to you to do the signing, but you can also offer do the signing at the escrow agent’s office. Doing it in person saved me the $200 fee.
8. Celebrate
At closing, the escrow agent collects your down payment wire, combines it with the lender's wire, confirms that everything matches the final closing statement, and sends the money to the seller.
Congrats! It's been a crazy journey and you're now a homeowner!
