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3 Tips for a Smooth Closing when Buying Income Property

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If you’ve ever bought a property – whether an income property or a personal residence – you know that the closing process can be somewhat tenuous.  Because the process relies on so many factors beyond your control, one missed deadline or requirement could result in a domino effect that delays everything.  As such, the purpose of this post is to offer some tips to make the mortgage closing process go a little smoother.

First and perhaps most obvious, make sure that all of your financing ducks are in a row.  For example, pay close attention to your lender’s requirements, and follow them precisely.  Provide items such as proof of funds, employment records, inspection reports, and anything else required in a prompt manner.  Also, it’s usually a good idea to have a backup funding source, because you never know when your initial lender might unexpectedly pull the plug on the deal.  Also, make sure you’ve allocated some extra cash for the day of the closing just in case something changes at the last minute.

Second, depending on your state of operation you will need either a title company or a property attorney to conduct the title search and close the deal.  In either case, contact the appropriate party early in the process.  This way, if something unforeseen comes up during the title work, like a tax lien or zoning discrepancy, you still have time to try and resolve the issue prior to closing.

Finally, always get a copy of the HUD-1 the day before closing.  The HUD-1 shows the closing costs, inter-month allocations if applicable, terms of the investment property mortgage, and other pertinent financial information.  Never wait until you are sitting at the table to review the HUD-1, because in many cases there will be errors.  Obviously, finding errors while at the table will delay things, so make sure any errors are addressed beforehand.

In the final analysis, it is up to you – the buyer – to make sure that all the closing requirements are taken care of before the day of the actual closing.  You must hold yourself accountable, because closing delays will increase your stress level at best, or kill the deal at worst.  Follow the tips in this post and you will be just fine.

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