The home closing process is a complex one, given the significance of the transaction. However, if you know what to expect and plan properly, it can be a seamless and less stressful experience. In this read, we are going to take a look at the steps it takes to close on real estate and to prepare buyer inspections before to get Buy the house.
Opening an Escrow Account
The initial process begins by opening an escrow account, which is held by a third party like your escrow agent or the bank. This party holds on to the money involved with the transaction.
Get a Home Inspection
It’s important to hire a reputable home inspector to do a walkthrough of the house and inspect everything, including pests. Inspections are vital as your mortgage lender may need one in order to process the loan. You don’t want to make a poor purchase decision and inspections ensure that you are buying a house that’s in excellent condition and won’t cause issues in the near future. If any problems are found, they can be handled before the money changes hands.
Complete the Mortgage Application
You’ll also need to go through the mortgage application process, which involves the submission of financial records and other relevant documents. So, ensure you have recent income statements, tax returns, bank statements, etc. The lender will give you a list of required documentation to ensure you are ahead of the game. Also, consider getting pre-approved for a mortgage before you begin your hunt for a house. It helps speed up the final approval and can also give you a lock on the interest rate so that you will not be vulnerable to changes in the market.
The Lender Appraisal
Most lending institutions will ask for an appraisal of the property’s value and you, as the buyer, are expected to pay the appraisal fee. The aim is for the appraiser to value the property for at least as much as the agreed buying price. If the value is low, you may want to renegotiate with the seller as lenders will often only approve the appraised amount.
Get Homeowners and Title Insurance
Look around for homeowners and title or hazard insurance. You will also want to work with the title agent to do a title search so that no other party can intervene and make a claim on the house. It’s also important to ascertain there are no lingering problems.
Closing the Documents
Once the loan is approved, you are finally at the finish line. The title or escrow agent should send a formal notice of the closing date as well as time. This should include a list of things you need to carry to the closing table. You should ideally get a closing disclosure that lists your closing costs, loan obligations and the like. In this stage, it is best to review all this with your lawyer or real estate agent.
An important thing to note is that most escrow companies make an effort to minimize closing costs. However, it’s important to do your due diligence and find one that won’t try and take advantage of your situation and include an array of costs that you don’t know about. Consult your local real estate agent or lawyer and inquire about the costs. Some home sellers may agree to handle the closing costs and this is often done during the contract stage/
Before the closing, take some time and do a final inspection of the new home to ascertain everything is in place and nothing included in the contract has been removed. After all this, the final step is to transfer the money from the escrow account and put towards your down payment.