Dave Ramsey Says You Must Take These 3 Steps Before Closing on a Home

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Don’t forget to complete these three crucial tasks. 

When you get ready to purchase a property, there are a lot of steps you must take first. You need to get the right mortgage loan, make an offer on the home, get it accepted and get it inspected and appraised to make sure there are no issues.

When you’ve taken care of all the preliminary tasks, you’ll finally move forward towards closing. That’s when the money and property changes hands. And, as finance expert Dave Ramsey explains, there are some additional tasks you’ll need to check off your to-do list before closing happens.

1. Buy homeowners insurance

Ramsey explained that you’ll need homeowners insurance coverage when you close on your home.

“Talk with an insurance agent at least a month before you plan to close on your house,” Ramsey advised. By looking into your insurance options early, you can shop around and find affordable, comprehensive coverage.

Ramsey is right this task needs to be completed early. Your mortgage lender is generally going to require you to have insurance because a policy will protect the home and the home is the collateral or the security for the loan.

Even if you’re paying cash, though, you want insurance in place before you take possession of the home. The last thing you need is to lose your entire investment because a fire or other disaster happens before you get a chance to get covered.

2. Buy title insurance

Title insurance protects you if it turns out there is some problem with the right to ownership of your home.

When you buy property, you take title to it. The title outlines who the legal owner(s) are. If there is a lien on the title from the prior owner not paying taxes or some other issue, you inherit these problems with the title. You could end up incurring significant costs, so you want to avoid this.

Title insurance protects against these problems. A title company does a search to check for defects or issues and insurance covers any costs you face if anything is missed in that search.

That’s why Ramsey suggests buying title insurance before closing. “This insurance will protect you from any problems in your home’s title,” he explained.

Your lender is going to require title insurance and again, even cash buyers should get a policy.

3. Get a cashier’s check

Finally, Ramsey said you should get a cashier’s check before your scheduled closing.

“This check is proof that you have the exact amount of down payment you said you’d pay,” Ramsey explained. “You will need to bring this on closing day when you sign your closing disclosure.”

Again, Ramsey is right about this. Unless you plan to do a wire transfer of your money to the lender before the day of your closing, you will have to make sure to have this cashier’s check ready to cover all the costs that you owe. You cannot just write a regular check for a home purchase.

Your bank should provide a cashier’s check for a small fee, but you’ll have to get it ready before closing day. The company or lawyer handling your closing will tell you the amount.

By completing these three steps, you’ll be ready for the day of your closing and hopefully the transfer of property will happen without a hitch.

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