Closing on a house can be a very exciting and very scary time. The pressure sure does build up when you are throwing large amounts of money around. Whether you have bought and sold many homes in your lifetime, or you are a first time home buyer, closing day can be a stressful day. If you are a first time home buyer, this article is definitely for you. It will explain what you should expect between signing your paperwork and when the big day arrives! So if you are curious what to expect on closing day, read on to find out!
When it comes to closing on your house, it all happens within your lawyer’s hands. You will need a trusted lawyer on your side to complete your transaction. The Susan & Moe Team has preferred lawyers who can help you with your purchase. Just ask us for their contact information!
Curious about the benefits of using a real estate agent to help with the transaction?
Check out our blog post on why you should use an agent to represent you on one of your biggest purchases of your life.
After you sign your Agreement of Purchase and Sale and your transaction is firm (all conditions – such as inspections or financing – have been waived or fulfilled), you will need to reach out to your lawyer. If you don’t have someone to represent you, ask The Susan & Moe Team, we have trusted lawyers who we work with regularly. If you purchase your home with our team, we will go ahead and send all of your paperwork over to your lawyer. You will want to give your lawyer a phone call to discuss next steps and ask for a full budget of closing costs. Between now and your closing date, it will seem as though nothing is happening on the lawyer side. Your lawyer starts their hard work a few days before closing. If you are getting a mortgage, your lawyer will ask for the contact information for your lender so they can speak with them. Your lawyer will also perform a title search which examines your new property’s title history over the years.
The average closing period is about 1 month but it is specific to both the Buyer and Seller’s preferences.
The Susan & Moe Team always makes sure to add a final walkthrough to your initial offer. If you are planning on doing major renovations to the property, sometimes multiple walkthroughs are scheduled so you can get contractors and structural engineers in before closing.
The final walkthrough is scheduled a week or two before closing. This walkthrough is generally about an hour long. It is one last time to go through the home before you close to make sure that there aren’t any major issues that have risen between when you saw the home last and closing. This is also the perfect time to measure for furniture, draperies or TV placement. You can also go through and figure out which colours would look nice on the walls or any sort of renovations you might want to make in the near future.
We all want our closing date to go as planned. Unfortunately, that is not always the case. Closing day involves many people and because of this, delays can easily happen. You need to be prepared for things to go sour and expect the unexpected. Below are a few different problems that could arise and cause a delayed closing:
• Mortgage delays: Make sure your lender provides your mortgage documents to your lawyer well before closing day.
• Final walkthrough delays: Sometimes, your final walkthrough will reveal last-minute problems. If this is the case, your real estate agent will be in touch with the agent on the other side to resolve the problems.
• Financial delays: Try not to make any changes to your credit report before closing. This includes applying for any sort of new loans that could impact your credit rating. Also, leaving your job right before closing could pose a problem.
The large amount of money due upon closing is of course your down payment. This will vary depending on your mortgage and the amount you are putting down. Generally, first time home buyers are putting 5-20% of the purchase price down as their down payment. On top of the down payment, you will also need to pay your land-transfer tax. If you are a first time home buyer in Ontario, up to $4,000 will be refunded. The remaining amount will also be due upon closing. A quick way to calculate an approx. cost of your land transfer tax is by using the Ottawa Real Estate Board Land Transfer Calculator. You will also need to set aside your lawyer fees. Normally, your lawyer will charge around $2000 for the transaction but this price can vary between law firms, whether or not you have a mortgage as well as any sort of additional fees that may apply. A general rule of thumb used by mortgage brokers is that 1.5% of your total purchase price will cover closing costs.
A few days before closing, you will meet with your lawyer to sign all of your final paperwork including your mortgage. This is also the time when all of your closing costs are due. You will need to bring your bank draft with you to before or after this appointment so make sure that your lawyer provides you with the exact amount and you have time to go to your bank. Due to COVID-19, many lawyers have changed their signing meeting process. Some are meeting you at your car to sign the paperwork and others are doing the signing over a Zoom or Skype call. Either way, your lawyer will go through your signing package and explain all of the documents and have you initial and sign many pages. You will want to set aside at least an hour for this appointment.
Once your documents have all been signed and your lawyer and the seller’s lawyer has processed everything, your keys will then be released to you. Normally, the keys are exchanged through both the seller and buyer lawyers, however, with COVID-19, most keys are being left in lockboxes at your new house. Your lawyer will provide the lockbox code and then you can go and unlock it to get your key! Sometimes the seller’s real estate agent will take the lockbox off on the day of closing and leave the key in your mailbox. If this were to happen, your buying agent will be able to let you know where you can find your key.
Once you are in possession of your keys, you are ready to move into your new home!
It is a good idea to try out all of your appliances as soon as you move in to make sure they are in good working order like they were said to be in your agreement. If they are not, you will need to reach out to your lawyer right away.
Closing on your new home is a very exciting experience and The Susan & Moe Team are always happy to be a part of the process. We are here for you every step of the way and if you have any questions during your time of closing, please do not hesitate to ask us! We hope you have enjoyed this article on what to expect on closing day. Remember that things may not go exactly as planned, but everything always works out in the end. The joys of moving into a new home always outweigh the hardships of getting there. If you are looking to purchase your first home, give us a call. We would love to help you find your dream home!