Real Estate Closing Process
The closing process can seem daunting. Mentally prepare yourself to digest a lot of paperwork and wait an average of 50 days to completely close and get the keys to your new home.The Closing Process - Where to Begin?
There are several parties involved in the process of buying a home: buyer, seller, realtor(s), and title company agent. Before the actual closing day arrives, the buyer should handle several responsibilities:Get a Home Inspection
Prospective buyers have the legal right to have the home inspected prior to purchase. Getting your future home inspected by a professional home inspector for potential flaws is essential to ensure your purchase is the right decision at the right price during negotiations. Read more about the ins and outs of home inspections.Finalize Contract Negotiations
Adjustments to the asking price for seller’s repairs may be needed based on home inspection findings. When the buyer has decided on a final offer for the home and any conditions or addendums, they can present their contract to the seller.Purchase Homeowners Insurance
Most lenders require home buyers to purchase homeowners insurance as well as title insurance. Educate yourself about homeowners insurance and how it can protect your investment. Damage, loss or theft can occur during home ownership, and the homeowners insurance company you select helps you pay for the repairs or replacement items needed in your home.Schedule a Final Walk Through
About a week before the closing day, you’ll want to complete a final walk through to ensure the condition of the home is what you expect.Purchase Title Insurance
As part of the mortgage approval process, mortgage lenders typically require home buyers to purchase title insurance for the lender. Title insurance protects the lender from disputes over ownership, and to establish who has a right to own the property. Find out more about why title insurance is so important.Get the Details for the Closing day
Now that you’ve secured title insurance, it’s important to ask your title agent any and all questions you may have before closing so that you feel prepared, confident, and comfortable on the actual closing day. Depending on the state you live in, the person from the title company representing you could be an escrow agent, settlement agent, or attorney.Ask Your Title Agent What to Expect:
- What day is the closing? What location?
- How much will I need to pay at closing? How do I pay?
- Cashier's or Certified check (confirm with your settlement agency)
- Wire transfer - When closing, never communicate wire instructions via email. Always do this over the phone. Phishing scammers could convince you to send sensitive bank account information by posing as an escrow officer. Learn how to maintain security throughout the entire closing process.
Make sure to get your closing documents ahead of time & review carefully.
By law, you must receive your closing documents at least three business days in advance. Request your documents early to give yourself time to review the litany of paperwork. Check for your own understanding of all documents as well as for errors. Is your personal information accurate on all documents? Are the interest rate and monthly payments what you expected? Are there any unexpected fees? Do all figures match from document to document? If there are any discrepancies, talk to your lender right away.Bring Everything you Need for Closing day
- Check or proof of wire transfer
- Driver’s license or ID
- Check book - just in case there are extra fees or closing costs
- Co-borrower or co-signer to your loan
- Closing Disclosure
- Lawyer, advocate, or trusted friend
Now that you’ve gone through the entire closing process and you have the keys to your new home, remember, time is money - plan ahead and prepare for the big move.Closing Mistakes to Avoid
Applying for new credit
Between the initial credit check to get approval for a mortgage loan, and the very end of the closing process when keys are exchanged, buyers should leave their credit alone. Do not apply for a new credit card or car loan during this time period as this will affect what your credit score looks like to lenders.Late Payments
Continue to pay your bills on time - this too affects credit appearances and will upset the apple cart with your lender.Not Following up
It’s important to follow all timelines in the closing process meticulously. These can be found in your purchase agreement. With the number of parties involved, it’s easy for someone or something to fall behind. Don’t be afraid to be a nag and check in if something’s not getting done.Changing Jobs
Lenders typically look for two years of established employment to approve potential buyers for a home. When possible, wait to switch jobs until after the closing.