Final Steps to Buying a New Home | New Homes Market Center
Step 6. Close on Your Loan
After the lender assembles all documents, letters, and verifications, they will submit your mortgage loan file to an underwriter for final approval. The underwriter can approve your mortgage loan, approve your loan subject to further requirements, or reject your mortgage loan. If you were pre-qualified and the home received a favorable appraisal, there should be little chance of loan rejection.
Your lender may also choose to submit your loan file to a mortgage insurance underwriter – a Private Mortgage Insurance (PMI) Company – depending on the down payment amount.
Some final steps in the new home-buying process are the completion of any repairs recommended by the by your inspector and insurance company. In most standard contract forms, repairs begin after loan approval. You and/or your mortgage lender will likely inspect the repairs. You choose your own hazard or home owner’s insurance. The insurance agency will provide proof of insurance to the title company for closing. When selecting insurance coverage, you should have dollar for dollar coverage on the loan amount or greater (the estimated cost to replace new), select a reputable company, and shop for the best rates.
When it is time to close on your home, the mortgage lender sends the official documents to the title company. The title company lists any prepaid charges and/or those that are to be paid at closing. Charges originating from any party involved in the sale should be shown on the closing statement (HUD-1). If you are required to bring money to closing, take a cashiers’ check for any amount over $500. All items that you paid prior to closing will show on the closing statement as P.O.C. (paid outside closing) indicating that you are only paying the charge once.
Further, you and the seller or builder will sign all legal documents. The title company may record some documents at the county court house. The title company returns the loan documents to the lender. And, last, the title company collects and disburses all monies as specified by the closing statement, your loan is considered funded and congratulations because you are now the new owner of your own home!
Finally, you get to move into your new home!