9 Closing Steps in a New Home

You have made an offer for a home and the seller has accepted it. Now what? Next, you close in your new home. But this part of the home buying process can be a source of major headaches for many buyers. It is a complex process that involves a series of steps before the triumphant moment when you receive the keys to your new place.

Let’s take a look at the main steps involved in the closing process, also known as “custody” or “liquidation,” depending on your location, so that when you get to that important moment, you’ll be prepared. If you’re working with a real estate agent, they can help guide you through these steps and provide guidance on what questions you should ask when. You may also decide to bring in a real estate attorney to review all the paperwork involved.

1. Prepare for closing by opening a escrow account.
The first step is to open an escrow account that will be owned by a third party, such as a bank or its title or custodian agent. . This neutral party account holds the money involved in the sale, such as required deposits or cash.

2. Get a home inspection.
You should hire a qualified outside inspector to take a tour of the house and carefully inspect everything inside and outside. Separate pest inspection is also necessary. Inspections are important because your mortgage lender may require one to process your loan. As Patricia Vosburgh of NextHome attests, “We go above and beyond our buyers and make sure all permits are withdrawn, we make sure they’re not buying a ‘lipstick’ and that we can provide them with all the information they need to make a sound.” If a pest inspection reveals an infestation or minor situation related to termites and other pests, it must be resolved before the mortgage company allows you to proceed with the closure.

3. Renegotiate the purchase contract, if necessary.
If you detect any problems with the house you want to buy, you have the option to renegotiate the price, that is, as long as you have not accepted a purchase contract that states “as is”, which means that the seller is not obliged to cover any repair costs or lower the initial price. It doesn’t mean you can’t ask, of course. If the cost will be very significant and the seller will not move, you can cancel the contract.

4. Complete your mortgage application.
You will need to go through the mortgage application and approval process, which includes submitting more documents and financial records, so make sure you have recent tax returns, income statements, bank statements, etc., ready to begin. Your lender can provide you with a list of the necessary documentation so that you can get ahead of the game. Seriously consider having your approval approved by a mortgage lender before you begin your homesearch. It can help speed up the final approval process and can give you a rate lock on your interest rate so you’re not vulnerable to changes in the market. You should receive an estimate of the loan, including the terms of your loan, estimated closing costs, estimated payments, and any other loan considerations. You should also receive an estimated closing date.

5. Don’t forget the lender’s valuation.
Most mortgage lenders will request an appraisal of the value of the home, and as a buyer, you usually pay the appraisal fee. The goal is for the appraiser to value the home for at least as much as the agreed purchase price. If the appraisal is low, you may have to renegotiate the price with the seller, as the lender will approve only the assessed amount.

6. Obtain title and home insurance.
Look for title insurance and homeowners insurance (sometimes referred to as hazard insurance), as well as work with a title agent to conduct a title search so no one else can step in and make a claim on the property and make sure there are no lingering problems.

7. Closing time of documents.
Once your loan is approved, you’re almost at the finish line. The escrow or title agent must send you formal notice of the actual closing date and time. It will include a list of what you need to bring to the closing table. You should also receive a closing disclosure describing your mortgage loan obligations, closing costs, etc. It’s a good idea to review this with your attorney, if you have one, or a real estate agent.

A note on closing costs: Many escrow companies make an effort to keep closing fees minimal, but buyers should do their due diligence and find parties that don’t address a lot of fees that will raise costs higher than necessary. be. Talk to your lawyer or real estate agent about typical rates in your area. Some sellers may agree to bear the closing costs, and this is usually agreed at the contract stage.

8. Final tutorial of the new house.
Within 24 hours of your scheduled closing, you can choose to take a final tour to make sure everything is in order and that nothing that is included in the purchase contract has been removed. Once this is done, your money or escrow deposit will be applied to your down payment on the home and you will need to make arrangements to cover all closing costs.

9. Sign on the dotted lines.
The final step is to sign the papers. It’s good to take your time with this, as the agreement can be up to 100 pages long. Carefully analyzing the fine print will save you a lot of time and worry if something seems wrong. One key thing you need to do is make sure your interest rate is correct and that no prepayment penalties apply. Take your lawyer or real estate agent with you if you are unsure about translating all legal terms.

Closing a house seems like an uncomfortable task, but the hardest part is waiting. If you take the time to enlist the help of good professionals at every stage of the process and feel confident that you have researched, you will wait for the day you receive the keys and be able to cross the threshold to your new home.

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By Catharine Bwana