Do’s and Don’ts before Closing

• If you are depending on a mortgage loan to purchase your new home, don’t make any large purchases.  An increase in your debt-to-income ratio reduces the amount of monthly income available for your mortgage payment.  Your lender may decide that you cannot afford to buy the home. 

• Don’t use available cash since lenders consider cash reserves when approving a loan.  Beyond the cash that is needed at closing, your lender may expect you to have a certain amount in reserve to cover initial mortgage payments.

• Don’t forget to contact your insurance agent to arrange for your homeowner’s insurance.  Your lender will require seeing your insurance binder at or prior to closing.  You may be expected to purchase the first year’s coverage up front, as your escrow account will begin building for payment of the following year’s premium.  

• Don’t forget to arrange for your utilities to be turned on in your new home.  Utility companies may require up-front deposits depending on your account history with their companies.

• Consider having representation at closing.  While your attorney may have already reviewed your contact, you may want to have his support at closing in case any issues arise.  Unless a professional has reviewed your Closing Statement, you cannot be certain that you have been charged and credited for the correct amounts.  Pro-rations and certain expenses are for the seller’s account and certain others are for the buyer’s account.  Errors can easily go undetected to a novice buyer.