Even if the seller moved out ages ago, you shouldn't be held responsible for any damage that occurred while the place sat empty, so long as the seller still owned the home. The seller is normally responsible, under the contract, for fixing any damage due to vandalism, dumping, spontaneous leaks, or even the seller's moving company (after all, the seller's homeowners' insurance is still operative).

TIP.

If the seller is at the walk-through, get friendly. Establishing a relationship you can draw on later, after your agents and the others are gone, can be invaluable. If negotiations were tough, try to put the business side of the transaction behind you, and ask practical questions like, "How do the burners on this vintage gas stove light?" and "Is that a fruit tree?" Also ask the seller for contact information, including a forwarding address. (You'll no doubt get some of the seller's mail, and can your conscience handle throwing away a letter from a long-lost relative?) Years from now, you may also need to call with questions like, "Where can we buy replacement tiles for the ones you installed?" or "What's this urn full of ashes in the attic?" If the seller isn't at the walk-through, you might want to get in touch or meet soon after the closing, for the same purpose. Establishing a relationship you can draw on later, after your agents and the others are gone, can be invaluable. If negotiations were tough, try to put the business side of the transaction behind you, and ask practical questions like, "How do the burners on this vintage gas stove light?" and "Is that a fruit tree?" Also ask the seller for contact information, including a forwarding address. (You'll no doubt get some of the seller's mail, and can your conscience handle throwing away a letter from a long-lost relative?) Years from now, you may also need to call with questions like, "Where can we buy replacement tiles for the ones you installed?" or "What's this urn full of ashes in the attic?" If the seller isn't at the walk-through, you might want to get in touch or meet soon after the closing, for the same purpose.

Is It Really Finished? Final Walk-Through of a New House

By now, you've hopefully seen your new house at various stages of construction-perhaps as recently as a week ago, if you negotiated for a series of walk-throughs in your purchase contract. But now you're at the very last walk-through, your first opportunity to see the house in its final form. Bring your original contract or addendum specifying products, extras, and upgrades.

The developer may accompany you, which is helpful for learning where things like the circuit breaker and the water shutoff valve are; how the heat, appliances, and other systems actually work; how you'll need to maintain them; and whether they're covered by any warranties. (Some builders call this the "orientation.") Expect also to be handed a pile of instruction pamphlets (or make sure to get these even if the developer isn't personally there).

TIP.

Gather all your new home's plans, documents, and more. According to California inspector Paul A. Rude, developers can be difficult to contact after the home is yours. Insist on copies of architectural plans, names of all the contractors and subcontractors, and any written warranties that came with building materials and appliances. These will come in handy for later repairs, matching new materials to old, and so forth. According to California inspector Paul A. Rude, developers can be difficult to contact after the home is yours. Insist on copies of architectural plans, names of all the contractors and subcontractors, and any written warranties that came with building materials and appliances. These will come in handy for later repairs, matching new materials to old, and so forth.

CD-ROM.

Use the "Final Walk-Through Checklist (New Home)" in the Homebuyer's Toolkit on the CD-ROM. A sample is shown below. This will help you assess whether everything (such as flooring, landscaping, and sinks) has been finished and is in good shape. A sample is shown below. This will help you assess whether everything (such as flooring, landscaping, and sinks) has been finished and is in good shape.

Final Walk-Through Checklist (New Home) Use this checklist to walk through your new house and make sure everything inside and out (from flooring to landscaping) has been finished and is in good shape. Then, create a punch list of what remains to be done. Work out with the developer how and when needed changes will be made and how this will affect your closing date.[image] Construction and finishing work is complete, with no missing trim, hardware, or paint, no exposed wires, and all water gutters pointed away from the house. Construction and finishing work is complete, with no missing trim, hardware, or paint, no exposed wires, and all water gutters pointed away from the house.[image] The landscaping is complete, with grading sloped away from the foundation (no trenches right next to the house). All agreed-upon trees have been planted (often the last thing to be done). The landscaping is complete, with grading sloped away from the foundation (no trenches right next to the house). All agreed-upon trees have been planted (often the last thing to be done).[image] No damage, scrapes, or gouges are visible on counters, walls, floors, appliances, or other surfaces. No damage, scrapes, or gouges are visible on counters, walls, floors, appliances, or other surfaces.[image] All fixtures, carpets, and appliances are the ones you specified. All fixtures, carpets, and appliances are the ones you specified.[image] The keys fit in the locks, keys have been provided for every door, and you know how to use them. The keys fit in the locks, keys have been provided for every door, and you know how to use them.[image] The lights and fans work when you turn switches on and off. The lights and fans work when you turn switches on and off.[image] The faucets turn on, no leaks are evident under or around the sinks, and all toilets flush. The faucets turn on, no leaks are evident under or around the sinks, and all toilets flush.[image] The stove, oven, refrigerator, garbage disposal, dishwasher, microwave, and all other appliances work. The stove, oven, refrigerator, garbage disposal, dishwasher, microwave, and all other appliances work.[image] The garage door opener works. The garage door opener works.[image] The ceilings, wall, and floors are in the condition you expected. The ceilings, wall, and floors are in the condition you expected.[image] The heating and air conditioning work. The heating and air conditioning work.[image] The sump pump, if there is one, works (to turn it on, you'll normally need to fill the pit with water.) The sump pump, if there is one, works (to turn it on, you'll normally need to fill the pit with water.)[image] All windows open and close, and all doors and cabinet doors are hung correctly and open and close smoothly. All windows open and close, and all doors and cabinet doors are hung correctly and open and close smoothly.[image] Other. Other.

NOTES:.

Don't let the developer rush you! Then create a so-called "punch list" of what remains to be done. Your developer may have a standard form for this.

At the end of your walk-through, the developer will review the list and should agree to make the needed changes by the closing. If that looks impossible, your best bets are to either delay the closing or get a written agreement saying that the developer will put the necessary money to complete your house into an account that the developer can collect on when the work is done. And you can add new deadlines within this agreement, saying that if the work isn't done by these deadlines, the money will be returned to you. Consult an attorney if you're not satisfied with the developer's assurances.

TIP.

"Now is when you have the most leverage," says Realtor Mark Nash. "Right before the closing, the developer is looking forward to cashing out and moving on. Be pleasant, meticulous, and assertive as you press for everything to get done-and delay the closing if you have to. As soon as the developer has your money, you're history-the developer is mentally already moving on to the next project." "Right before the closing, the developer is looking forward to cashing out and moving on. Be pleasant, meticulous, and assertive as you press for everything to get done-and delay the closing if you have to. As soon as the developer has your money, you're history-the developer is mentally already moving on to the next project."

Don't arrange your life around closing day. When Flora bought a newly built condo in Portland, Oregon, the last inspection was scheduled on a Friday, with closing the following Monday. Flora says, "I arrived Friday to find workers running in all directions. I went around with my punch list of things that should have been done and kept checking off 'not done,' 'not done.' But we couldn't put off the Monday closing-I was living in someone's basement, and my husband was flying up from California. The developer never finished all the items on the punch list; we later sued." When Flora bought a newly built condo in Portland, Oregon, the last inspection was scheduled on a Friday, with closing the following Monday. Flora says, "I arrived Friday to find workers running in all directions. I went around with my punch list of things that should have been done and kept checking off 'not done,' 'not done.' But we couldn't put off the Monday closing-I was living in someone's basement, and my husband was flying up from California. The developer never finished all the items on the punch list; we later sued."

Your Last Tasks Before the Closing

Below are the most important things for you to do in the approximately 24 hours leading up to the closing.

Check and Double Check Final Closing Cost Amount

Your closing costs include everything that you (and the seller) will have to pay to anyone connected with the sale, including your loan fee, points, and first month's payment; title and homeowners' insurance premiums; transfer and property taxes; recording fees; and down payment. Many people are surprised by how high their closing costs go-several thousand dollars is not uncommon.

Co-op buyers may pay a little less, because title insurance isn't available to them (as owner of shares in a corporation rather than land), and the taxes are normally lower because it's not considered a real estate transfer. On the other hand, co-op owners may be required to pay a move-in deposit, a stock transfer fee, and a fee for any credit checks run by the owner's association board.

Condo owners should also be prepared for a few closing costs not owed by ordinary homeowners, such as a move-in fee or move-out deposit and fees for credit checks run by the community association.

TIP.

Remember next April: Some closing costs are tax-deductible. These include the points and any prepaid interest you pay for your mortgage, and any reimbursement you pay the seller for already-paid local property taxes. Many other closing costs, while not tax-deductible, can be figured into your house's adjusted cost basis, helping to reduce your capital gains when you eventually sell. These include the points and any prepaid interest you pay for your mortgage, and any reimbursement you pay the seller for already-paid local property taxes. Many other closing costs, while not tax-deductible, can be figured into your house's adjusted cost basis, helping to reduce your capital gains when you eventually sell.

You should have already gotten some warning of your closing cost amount from your lender, which was legally obligated to give you a "Good Faith Estimate" (GFE) of these costs (not just the ones relating to your loan) within three days of first receiving your loan application. Remember, after January 1, 2010, your GFE should be on a standard form (a copy can be found in the Homebuyer's Tool Kit on the CD-ROM), and the lender isn't permitted to raise many of the costs on it, while others can only be raised by up to 10%.

Your current task, on the day before the closing, is to find out whether your total closing costs are adding up as you expected and get ready to pay that amount. To see the latest tally, ask your closing agent for your final draft of your HUD-1 Settlement Statement. This is a standard from developed by the Department of Housing and Urban Development (HUD) that the lender is required to give you at closing. There are two versions of the form currently in use: beginning January 1, 2010, lenders must begin using the more recent version, which is set up to make it easy to compare the final costs to the estimated costs on the GFE.

CD-ROM.

The Homebuyer's Toolkit on the CD-ROM contains a blank HUD-1 form. Open it to see the full list of possible closing costs. A partial sample is shown below. Open it to see the full list of possible closing costs. A partial sample is shown below.

At the closing itself, you'll receive a final version of the closing statement or HUD-1 form. But it's good to get an advance look, so that you can check for oddities, errors, or failures to credit you for fees you've already paid. For example, your earnest money deposit should show up as a credit, reducing what you'll owe at closing. If you're buying a newly constructed house, your advance payments to cover customizations or upgrades should be credited against your closing costs. Bring up any errors or questions with whoever is responsible (usually, the lender or the closing agent) before before you get to the closing. you get to the closing.

Hopefully you won't be one of the consumers who find that the fees have been added to or padded since the original estimate (sometimes called "junk fees") to pull in extra profits, usually for the lender or title company. If you see unexpected or questionable fees, realize that you may be able to negotiate them away. The most likely candidates for negotiation are those called "Items Payable in Connection with the Loan," listed on the lines numbering in the 800s on the HUD-1 form, and "Title Charges," listed on the lines with "1100" numbers. The sooner you bring these up, the more negotiating clout you have.

Sample Settlement Statement: Effective Until January 1, 2010

Sample Settlement Statement: Required January 1, 2010

CAUTION.

Don't pay junk fees that exceed legal limits. Remember, beginning January 1, 2010, certain costs can't exceed the estimates given on the GFE, and other costs can only increase by a maximum of 10%. (Many of the costs on the lines numbering in the 800s or 1100s fall within this category.) For a full list of which costs can't be changed, review the Good Faith Estimate form that appears in The Homebuyer's Toolkit on the CD-ROM in the back of this book. Remember, beginning January 1, 2010, certain costs can't exceed the estimates given on the GFE, and other costs can only increase by a maximum of 10%. (Many of the costs on the lines numbering in the 800s or 1100s fall within this category.) For a full list of which costs can't be changed, review the Good Faith Estimate form that appears in The Homebuyer's Toolkit on the CD-ROM in the back of this book.

Assuming you find no problems, the total on the closing statement is the amount that you'll need to show up with at closing. Have your real estate agent, closing agent, or attorney confirm that the amount is, in fact, final.

Make Payment Arrangements

For convenience, many buyers pay their entire closing costs in one lump sum. (The closing agent saves you from having to write separate checks to everyone.) We're assuming you haven't already deposited money with the closing agent, which some buyers do several days in advance-usually more than they think they'll need, with the idea of getting a refund after closing. This allows buyers to use a personal check, which you can't do at the closing itself.

Of course, if you've got money coming from different sources (a bank account here, a family member there), compiling it into a lump sum before giving it to the escrow agent might not actually be so convenient. The important thing is to make sure you'll be transferring the money-every last cent of it-in an acceptable form. That usually means either a certified or cashier's check or having funds wired directly from your bank or investment company. A briefcase full of five-hundred-dollar bills would probably work, too, depending on how many bodyguards you normally travel with.

If wiring some or all of the funds is your plan, double check how much advance notice your bank needs. Wiring is usually a same-day deal, but not always. One of this book's authors nearly had her California house closing delayed because the wired funds mysteriously got stalled in an office in Texas.

Personal checks aren't usually accepted at the closing, because of the uncertainty over whether they'll clear. Even so, it's a good idea to bring your personal checkbook to the closing and make sure a few hundred dollars will be in your account. This is in case any last incidentals crop up.

Bring our checkbook. Everything had been going smoothly with Meggan and her sister's joint purchase of a house in Everything had been going smoothly with Meggan and her sister's joint purchase of a house in Massachusetts. They arrived at closing with a cashier's check for the exact amount they'd been told to bring. But, as Meggan describes, "For some reason, the amount was too low, by $500. My sister broke down crying, saying, 'I knew this was too perfect, something had to go wrong.' Since she's my older sister, I started worrying, thinking maybe I should be in tears, too! Although there was some question about whether they'd accept our personal check for $500, we had a prominent local attorney with us, who said, 'They're good for it, I'll cover it if it doesn't clear.' So the deal went through."

Read Your Documents and Raise Any Last Issues

By the time you walk in the door to your closing, all possible negotiations and issues should have been settled. Closing day is not the time to tell the seller, "You never removed the pet door!" Nor is it a good time to ask your mortgage broker what this line about "prepayment" means.

Start by reviewing the escrow instructions, and any letters or instructions from your lender, to make sure you've done everything requested. Also ask your mortgage broker and real estate agent to give you complete sets of any draft documents that have been prepared to date and to explain to you (if they haven't already) what the documents mean. Unfortunately, some documents might not be prepared until right before closing day, but you can ask for the standard templates, for example, of the promissory note and mortgage.

Finally, call your real estate agent, closing agent, and mortgage broker to double check that they're not waiting for anything else from you. (And, just in case, that they still have tomorrow's closing on their calendar!)

Prepare What You'll Bring to the Closing

Other than money, the buyer is expected to bring only a few documents, including proof of homeowners' insurance and an original copy of any inspection reports. As a practical matter, your real estate agent may bring these or have forwarded them to the closing agent. But if you're in doubt, or think you may be the only one holding any possibly relevant document, bring it. Also bring receipts or other proof of things you've already paid (such as inspection fees or homeowners' insurance) in case any last questions arise about whether these can be deducted from your closing costs.

Finally, bring proof of your identity. Many people forget a driver's license, passport, or other photo identification. You'll need to show it to the notary, who stamps the documents after you sign them.

The Drum Roll, Please: Attending the Closing

No matter what time your closing is scheduled for, plan to take the day off work and to get there in plenty of time. Although a normal closing lasts no more than an hour or two, surprises are common. Also, your closing agent may have more than one closing scheduled that day, and an earlier one might run over.

Whether or not you're meeting in one room, who signs the documents first first isn't really an issue. The seller could, for example, sign the deed transferring ownership to you before you'd signed anything-but would have the protection of knowing that the closing agent won't record the deed until you've signed your documents and the loan has been funded. isn't really an issue. The seller could, for example, sign the deed transferring ownership to you before you'd signed anything-but would have the protection of knowing that the closing agent won't record the deed until you've signed your documents and the loan has been funded.

We'd love to tell you to read every document one last time before signing, but that's probably not realistic-it would take hours. By now, you should have seen many of the documents in draft form and read them when you weren't under time pressure. As adviser Russell Straub says, "It's important to get your questions answered, but if you wait until the closing to read everything, you're really throwing sand in the gears." Just listen carefully as your team of professionals explains what each document is; compare the filled-in portions and numbers (not the boilerplate) with your own notes; and raise questions about things that don't appear as you'd expected. If you have an attorney representing you (and not simultaneously representing the seller), you can rely on the attorney to tell you what a document generally means and whether it's safe to sign.

Closing Documents, Part One: Your Mortgage Loan

The first set of documents you'll deal with at the closing are those concerning your loan. Makes sense: Unless your financing goes through, there's no point in continuing.

TIP.

Expect a little sticker shock. Annemarie Kurpinsky, a California real estate agent, says, "Buyers tend to think in terms of the house's purchase price-as in, 'I'm buying it for $800,000.' But the closing can be daunting, because you're now confronted with loan documents showing how much you'll REALLY be paying, after the interest and other costs are added up. To relax, try focusing on all the reasons you chose this house in the first place, on how it will be a good investment over time, and on the fact that you don't need to pay this all at once!" Annemarie Kurpinsky, a California real estate agent, says, "Buyers tend to think in terms of the house's purchase price-as in, 'I'm buying it for $800,000.' But the closing can be daunting, because you're now confronted with loan documents showing how much you'll REALLY be paying, after the interest and other costs are added up. To relax, try focusing on all the reasons you chose this house in the first place, on how it will be a good investment over time, and on the fact that you don't need to pay this all at once!"

Before you sign, look at every number to make sure it's what you were expecting and that no one mistakenly added any zeros. Below is a summary of the main documents you'll be given. However, there will probably be more. For instance, your lender may have you sign an affidavit promising that you'll live in, not rent out, the house.

* Promissory note, or "Note." Promissory note, or "Note." You're stating that you're borrowing X amount of money and personally guaranteeing to repay it. You're stating that you're borrowing X amount of money and personally guaranteeing to repay it.* Mortgage or Deed of Trust. Mortgage or Deed of Trust. Here's where you agree to have a lien put on your house as security for the loan. It turns your house into collateral, which the lender can claim in foreclosure if you fail to repay or to otherwise follow the terms of the Note (you "default"). The lender will record your mortgage with the appropriate local government office. Here's where you agree to have a lien put on your house as security for the loan. It turns your house into collateral, which the lender can claim in foreclosure if you fail to repay or to otherwise follow the terms of the Note (you "default"). The lender will record your mortgage with the appropriate local government office.* UCC-1 Financing Statement (co-ops only). UCC-1 Financing Statement (co-ops only). Since co-op financing involves no mortgage, your lender may instead fill out and record this document, to show its claim on your property interest. Since co-op financing involves no mortgage, your lender may instead fill out and record this document, to show its claim on your property interest.* Truth-in-Lending (TIL) Disclosure Statement, or "Regulation Z form." Truth-in-Lending (TIL) Disclosure Statement, or "Regulation Z form." You should have seen an earlier draft of this, within three days after applying for the loan. Here, the lender will break down all the payments you'll make in connection with your loan. It will confirm your interest rate, the annual percentage rate ("APR"), and the total cost of the loan over its life. You should have seen an earlier draft of this, within three days after applying for the loan. Here, the lender will break down all the payments you'll make in connection with your loan. It will confirm your interest rate, the annual percentage rate ("APR"), and the total cost of the loan over its life.* Closing Statement, Settlement Sheet, or HUD-1 Settlement Statement. Closing Statement, Settlement Sheet, or HUD-1 Settlement Statement. This is the statement described above, usually prepared by your closing agent using a HUD-1 form. It itemizes each payment to be made by you and the seller, not only for the house, but for other costs such as services performed in connection with the sale, insurance premiums, paying off liens, and more. (The seller will need to sign it, too.) For more information, see This is the statement described above, usually prepared by your closing agent using a HUD-1 form. It itemizes each payment to be made by you and the seller, not only for the house, but for other costs such as services performed in connection with the sale, insurance premiums, paying off liens, and more. (The seller will need to sign it, too.) For more information, see www.hud.gov (click "Buying," then "Sign papers," then "Settlement Costs and Helpful Information"). Before stuffing the HUD-1 statement into your files, check whether your closing agent included a refund check with it (for any extra money that you deposited ahead of time). (click "Buying," then "Sign papers," then "Settlement Costs and Helpful Information"). Before stuffing the HUD-1 statement into your files, check whether your closing agent included a refund check with it (for any extra money that you deposited ahead of time).* Monthly payment letter. Monthly payment letter. This tells you how much money you'll pay in monthly loan principal and interest. It may also include amounts that your lender requires you to put into escrow each month for payment to third parties such as the tax collector or insurance companies (homeowners' or PMI). Your closing agent will take care of setting up this account on closing day. This tells you how much money you'll pay in monthly loan principal and interest. It may also include amounts that your lender requires you to put into escrow each month for payment to third parties such as the tax collector or insurance companies (homeowners' or PMI). Your closing agent will take care of setting up this account on closing day.

Closing Documents, Part Two: Transferring the Property