Getting to the point of closing a deal is exciting because it means that you are very close to receiving ownership of your dream house. However, the real estate closing process involves a lot more work than it seems, and you will need to ensure you go through all the different steps to properly evaluate whether a house is the right one for you.
Steps to a Closing Process
The closing process is a complicated one and requires paying attention to detail. These are the main steps you have to take to successfully close the deal:
Open an Escrow Account
An escrow account will hold the escrow money of the involved parties. A third party handles this money while the buyer and the seller are in the process of completing a transaction. This is an essential step to prevent either side from cheating the other.
Do a Title Search and Obtain Title Insurance
A title search and title insurance are necessary to allow a rightful and legal transfer of ownership. They will also allow a buyer to know if the property has any previous claims that have not been resolved. If there are, you can bring this up with the seller or ask for a lower price.
Perform a Home Inspection
While this is not a legally required step, it is still highly advisable that you go and inspect the house in person. Inspecting the house is vital to find out if there are any underlying problems that will cost you money to fix.
Renegotiate the Offer and Closing Costs
If the home inspection reveals any issues, you can renegotiate the offer by asking them to drop their price or perform repairs. You can also negotiate closing costs, which may otherwise cost you a lot of money accumulatively.
Lock In Your Interest Rate
Locking in an interest rate means reaching an agreement between the borrower and the lender that guarantees the borrower will pay a specific interest rate. Interest rates for your mortgage loan change often, so it’s a good idea to monitor the rates and lock it in when it is low. This will save you a lot of money in the long run.
Go Through Your Home One Last Time
Before you reach the closing date or sign any of the documents that will formalize the property transfer process, go on a final walkthrough of the property. This enables you to double-check everything and ensure that the property is in good condition before you make a final decision.
Sign the Closing Documents
It’s finally time for you to sign the closing paperwork. This will happen on closing day, and it would be beneficial for you to take your time and read through everything again. This will ensure that the information is aligned with what you have negotiated with the seller.
It’s important to note that the documents may be difficult to read because of their technical language. You can choose to hire an attorney and consult with them throughout this process.
How Long the Closing Process Takes
How long it takes to go through the real estate closing process depends on a lot of factors. For instance, buyers who have pre-approved loans will be able to close a lot faster. The duration also depends on how long the underwriters take to process the documents, review the appraisal, and verify the buyer’s information. Usually, this will last for about one to two weeks.
There are a few complications in the documents that may result in a delayed closing process, including:
- Having a low appraisal
- The buyer’s credit report having mistakes or having new changes that reflect more debt
- Changes in the buyer’s marital status
- Missing information
- Sudden changes in the closing fees or the mortgage loan estimate
House Closing Process for the Seller
House closing for the seller may involve pre-signing the transfer documents because you don’t always have to be present on closing day when the buyer signs everything. The closing process is finalized when the escrowee pays off the lender and the seller receives the money from the property sale.
Real Estate Closing Process
The real estate closing process takes a while to complete and involves a lot of different steps. While it may seem drawn out or tedious, the process is crucial to follow because it allows you to evaluate the smallest details and make sure you agree with everything before you sign the final transfer papers.
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