Becoming a homeowner is an exciting and exhilarating time, but the whole “closing” process can sound overwhelming if you don’t know what to expect.
There are a lot of moving parts to successfully closing on your new home, and a competent real estate team makes all the difference when it comes to everything going as smoothly as possible.
We’ve got you covered! Here’s everything first-time buyers need to know about closing and what you can do to prepare.
Lawyers and Inspectors
Hiring an attorney who specializes in real estate is always a good idea. Their expertise in these specific types of contracts and processes can save you from making a costly mistake. Having a lawyer on your side means you have someone whose only concern is your best interests.
Another important step of your closing process is to have a thorough home inspection performed by a licensed and qualified professional.
An inspection can save you lots of money in the long run and alert you to serious or hazardous issues with the home that could affect your decision to follow through with the purchase. Many buyers also add an inspection contingency to their contract.
Some prospective homeowners might be tempted to skip the home inspection, especially in hotter housing markets. Don’t do it! You could end up exposing yourself and your family to major safety problems or expensive repairs.
“Clear to Close”
“Clear to Close” is the greenlight from the lender, signifying that you’ve met all the requirements and conditions to proceed with your mortgage. Once your closing is scheduled, they’ll start preparing all of the documents you’ll need to sign.
On average, from the time you sign your contract to the time you’re handed the keys is 30-60 days. Government-backed mortgages like an FHA loan can take slightly longer to close than a conventional mortgage.
During this timeframe, there are definitely things you should avoid doing that could throw up roadblocks or even derail your sale completely. Don’t buy a car, be late on any payments, and avoid changing jobs if possible — this could damage your credit score or change your ability to qualify for your loan, possibly resulting in your loan being denied.
Escrow
After your offer is accepted, you’ll deposit your earnest money in an escrow account. Earnest money is a good-faith deposit that you make to demonstrate that you’re a serious buyer. Your real estate agent will direct you as to where your earnest money will be deposited (often with the listing brokerage or title company.)
While it sounds similar to a down payment, it’s more like an incentive for the seller — and it will be applied towards your total purchase price. It’s like icing on the cake in a competitive market where there might be several offers on the same property.
Your real estate attorney or agent will also provide guidance in selecting a title company who will handle your closing. This is a trusted third party that, amongst other things, creates the escrow process that protects both the seller and buyer’s funds and crucial documentation during the closing process.
Your title agent, or “escrow agent”, will ensure that the contractual obligations of both parties are fulfilled and closing deadlines are met. They also handle the disbursement of funds and the delivery of your deed.
Title Clearance
This is an essential part of buying a home that will protect your investment and potentially save you from financial loss.
If you’re not familiar with the concept, a title is legal proof of ownership and a symbol of the rights you have as the property owner. Before it can be granted, the experienced professionals at your title company will perform an exhaustive title search.
By combing through deeds, court documents, and historical records, your title agent hunts for any encumbrances, defects, or clouds on the title to your prospective new home .
A one-time premium for title insurance is usually included in your closing costs, the details of which will be listed in your disclosure document. It’s crucial to review this form carefully for any errors or unexpected charges, and to alert your lender right away if you have any concerns.
While title insurance isn’t required in every state, it’s a wise idea to buy it — for a minimal cost, this policy provides valuable protection and peace of mind. You’ve worked so hard to get to this moment, don’t possibly lose your home due to fraud, missing heirs, or other mistakes.
Walk-through and Paperwork
Before you sign on the dotted line, you’ll get an opportunity to have a final walk through the home. This is your last chance to make sure that everything listed as included with the house is all present and accounted for.
Take your time and don’t feel rushed. Buying a home is a huge investment and a major commitment, so you have every right to examine every inch of your potential new house before the sale is finalized.
The day has arrived, it’s time to sign the paperwork and receive your keys. Be sure to read every single word carefully, and ask your lender, real estate attorney, or closing agent for more clarification if there’s something you don’t understand.
The entire closing process can take as little as a week or so if you’re paying cash, and up to 60 days if you’re getting a mortgage. Once you sign the final paperwork, all of your hard work and due diligence will pay off handsomely.
The Bottom Line
Buying a house for the first time is quite the adventure, and the process involves many moving parts as well as a whole team of skilled, knowledgeable professionals.
A customer-obsessed title company that offers a full spectrum of services will help you find your dream home and get through the closing process as quickly and easily as possible. If you’re finally ready to own your own home, give contact us today!