Taking the Confusion Out of the Closing Process

Real Estate Tips
March 28, 2024

When you’re about to purchase a property, the closing process is the final stage before you take that surreal first step into your new home. However, how to close on a house and the intricacies involved can seem overwhelming and make you want to crumple into tears. Here we break down the closing process to help you understand what to expect and how to get ready.

Defining the Closing Process

The closing process, also referred to as “settlement” or “escrow” in some states, involves completing the transfer of property ownership from the seller to the buyer, signifying the final stage of the purchase. It includes signing documents, paying closing costs, and finalizing your mortgage (if applicable).

5 Steps Before Closing

To best simplify the closing process, we can break it down into these key steps:

Financial Preparation: Make sure your financing is in order and you have a loan approval from your mortgage company. This step is crucial because any hitches here could delay or disrupt the process.
Title Search and Insurance: A comprehensive title search is run to ensure that there are no liens or disputes related to the property. Title insurance is then acquired to safeguard both you and your lender against other claims on the house after you own it.
Home Inspection and Appraisal: An inspection of your home is crucial as it helps uncover any potential issues that may require negotiation on the terms of sale. Likewise, a property appraisal provides assurance to both the buyer and lender regarding the market value of the property.
Document Review: Before closing you will receive a Closing Disclosure document. This important paperwork details your loan terms, monthly payments and closing expenses. It’s vital to review this document to ensure accuracy and clarity.
Final Walkthrough: Just before the closing day arrives you have the chance to do a walkthrough of the property to confirm that everything is in line with your expectations and the agreed upon terms of sale.

Preparing for Closing

You’ll want to give the following your deadpan attention to avoid any issues:

Review All Documents: Prior to closing day, make sure to go through all documents including the Closing Disclosure, loan agreement, and any property transfer papers.
Understanding Closing Costs: In addition to loan origination fees, title insurance, taxes and escrow payments, closing costs can run anywhere between 2% and 5% of your home’s purchase price. The Closing Disclosure form provided three days before closing breaks down these costs for the buyer’s reference.
Secure Payment: Check to make sure you have the funds for your down payment and closing costs. This often will have to be either a cashier’s check or wire transfer.
Valid ID and Proof of Insurance: Remember to bring ID to closing. If you’re planning to finance the purchase, make sure you can show proof of homeowners insurance as well.

Tasks After Closing

Closing may be over, but new homeowners face several immediate responsibilities. These include reporting the deed to local government, getting up-to-speed on when and how mortgage payments are made, and arranging for utility transfers. It’s also essential for homeowners to start planning for maintenance and any urgent repairs to keep their property in good shape.

How a Real Estate Agent Can Help Demystify the Closing Process

As much as you wish you could walk into closing like an overconfident bomb squad leader, it’s better to have an ally by your side. Enter your real estate agent. They can offer guidance at each step of the closing process, ensuring your interests are served. They handle coordination with all parties, resolve potential stumbling blocks, and make the entire process simpler.
The closing process might appear overwhelming at first, but with the right preparation and support, you can get to what’s most important–enjoying your new home. If you’re looking for that support in a Realtor, contact Linda Moore to guide you through closing, and beyond!