What To Expect At A Real Estate Closing

Closing on a home means the beginning of a new chapter in your life. But this important final step toward homeownership requires a lot of paperwork, signatures, and fees. Here’s a closer look at what happens on closing day and throughout the home closing process.

What is the closing process?

The closing date is the final step in the often lengthy process associated with the sale of real estate, also known as “closing.” It can take several months from the time you sign the purchase contract to the closing date. For homebuyers, closing is the day they officially take ownership of the property and receive the keys. For sellers, closing is the day they receive the proceeds from the sale.

During the closing process, everyone involved completes many important tasks. Unless paying cash, prospective buyers must carry homeowners insurance; mortgage Required to purchase real estate. An independent third-party inspection of the home and its condition is performed. The title company will also perform a title search to ensure there are no claims on the title to the home.

Buyers and sellers resolve all discussions regarding costs, repairs, and supplies through their agents. The buyer will make a final inspection of the property. Typically, sellers pack up and leave by the closing date.

On closing day, homebuyers must sign a number of documents to finalize the transaction. Many other parties are often present on the day of closing, including the seller, lender, real estate agent, closing agent, and an attorney who reviews signed documents.

How long does it take to close on a house?

The timeline from making an offer to closing the sale varies. When purchasing a home with a mortgage, the average time to complete the home purchase is 44 days. ICE Mortgage Technologiesa mortgage advice and technology platform. However, especially all cash transaction.

Preparation steps for closing on a home

For homebuyers, there are many tasks that must be completed during the closing phase. At the same time, many steps are handled simultaneously by lenders and real estate agents, who help coordinate with the appropriate parties. To prepare for closing, you should:

1. Get a home inspection

Getting a home inspection is essential. Even the most beautiful home can have hidden problems.

During a home inspection, a contractor or professional inspector inspects your home for major problems, such as cracks in the foundation, leaks, problems with the plumbing or electrical systems, and potential safety hazards. Depending on the results of the inspection, you can decide to back out of the deal or ask the seller to resolve the issue as a sales emergency.

2. Consider hiring a real estate attorney

Purchasing a home is not just a transaction between a buyer and a seller. This is also a relatively complex legal process. Although usually optional, hiring a real estate attorney may have the benefit of avoiding unforeseen problems down the road.

3. Get homeowners insurance

Most lenders will require you to purchase homeowners insurance before closing your loan. Homeowners insurance policies provide financial protection against losses related to events such as fire and wind damage.

Specific insurance requirements will vary depending on the location of your new home. In some areas of the country, you may also need flood and earthquake coverage.

4. Submit the required documents to the financial institution

During the closing process, lenders may request additional documentation to verify your source of income, current debt levels, and even employment history, especially if there are gaps. Please respond to these requests promptly to avoid potential closing delays.

5. Negotiate closing costs

Closing costs can be high, but some costs are negotiable. See if your lender is willing to reduce origination fees or waive application fees. If you need loan title insurance, ask your mortgage company if you can explore different options to find the best interest rate, rather than paying a fixed fee from your chosen insurance company.

6. Check the closing date

The next step is to check the closing date. This is the date on which the seller will permanently vacate the home and you will be able to move in. Please note that the closing date is typically at least one month after the purchase offer is received. If you encounter unexpected obstacles during the closing process, it may take longer. After confirming the deadline, start packing your belongings and call your moving company.

7. Have cash ready before closing

On closing day, you will need to bring a check to cover closing costs. (In some cases, you can send a wire transfer instead.) These costs typically include closing costs, down payment, and any accrued interest or property taxes associated with the loan. All of these must be detailed on your statement. final disclosure document. Financial disclosure information is expected to arrive approximately three days prior to the scheduled closing date. You can compare this with yours loan estimate This is to avoid unexpected changes.

8. Perform the final walkthrough

Even if your initial home inspection goes well, it’s a good idea to do a final walk-through just before you move into your new home. There’s always the possibility that damage occurred between the initial inspection and move-in date. During the final walk-through, verify that the seller has made all necessary repairs and removed anything from the home and property that was not included in the sales contract.

9. Sign the closing documents

At closing, you will receive a number of important documents. Be sure to ask your real estate attorney or real estate agent about the purpose of each document, as it can exceed 100 pages. Below are some of the documents you can expect to receive.

• Loan estimate: This document contains important information about the loan, including terms and conditions. interest rate and closing costs. Please make sure all information is correct, including the spelling of your name.
• Final disclosure: Similar to the Loan Estimate, the Closing Disclosure Summary your mortgage details.
• initial escrow statement: This form includes all payments the lender takes out of your escrow account during the first year of your mortgage. These fees include tax and insurance.
• Mortgage note: This document contains your promise to repay your mortgage. It shows the amount and terms of the loan and what action the lender can take if you default on your payments.
• Mortgage loan or trust deed: This document protects the mortgage deed and gives the lender a claim against your home if you fail to meet the terms of the mortgage deed.
• certificate of occupancy: If you are purchasing a newly built home, you will need this legal document to move in. Also ask for a copy of the rights policy and research paper.
• sales contract: This is a binding contract that details the terms of a real estate transaction. Once you sign, your real estate purchase is complete.

What to bring to house closing

All parties involved in the transaction should be prepared to bring photo identification and a professional representative, such as an agent or attorney, to the closing table.

The seller must be prepared to document any repairs ordered after inspection. You must also have the keys to the property you are handing over.

Buyers must bring funds to cover closing costs, which are often conveyed through a cashier’s check at closing. At this time, the buyer must also provide proof of homeowner’s insurance.

What happens when the store closes?

On the day of closing, you have two main responsibilities: signing the legal documents and paying closing costs and escrow items. It is important that you read all of these legal documents carefully to understand exactly what you are agreeing to. Here’s a quick breakdown of what to expect:

1. First, provide identification, such as your driver’s license or passport, marriage certificate (if you’re buying a home with your spouse), and proof of homeowner’s insurance for your new property.
2. You will then sign some documents related to the property sale. This includes the closing disclosure, the mortgage documents that secure your new home as security for the loan, the promissory note that promises to repay the lender, and the real estate deed that transfers legal ownership of the property.
3. Closing costs and items will be paid in escrow at closing. These fees include property taxes, HOA fees (if applicable), and utilities. This transaction will likely require a certified or cashier’s check, and you may be able to wire it directly from your bank. Personal checks are often not accepted.
4. Unless there was a contingency in the purchase contract that allowed the previous owner to stay for a certain period of time, you should receive the keys to your new home after you sign the documents.

What is the cause of the closing delay?

A variety of factors can prevent a deal from closing, including a low appraisal, unmet contingencies, title issues, and coming to terms with mortgage financing.

low rating

An appraisal is a professional evaluation commissioned by a mortgage lender of the value of the home you are considering purchasing. The purpose of the appraisal is to determine whether the home’s sales price is in line with its fair market value. This step could affect your closing if the home’s appraised value is less than the purchase price or the amount you want to borrow. Financiers will not lend more than the appraised value. So if you don’t have the cash to make up the difference, known as the valuation gap, the deal can fall through the cracks.

failure to raise funds

If you can’t secure a mortgage because something has changed in your household finances, money isn’t paid, or it’s delayed for some other reason, your closing could be delayed or scrapped altogether.

unmet contingency

A contingency in a real estate contract allows one of the parties to withdraw from the transaction if certain specified conditions are not met. This may include a home inspection that reveals major problems with the home and is contingent on the buyer securing financing (see above) or the seller acquiring a new home. May include purchases. If problems related to these or other contingencies occur, the transaction could be stalled or completely collapsed.

title problem

For a real estate sale to be successful, ownership must be clear. This means that there must be no claims or doubts regarding ownership. This means that if there are any liens or claims against the property, the closing will not proceed until those issues are resolved. If the seller is behind on income or property taxes, the Internal Revenue Service or state government may place a lien on the property.