What To Expect When Closing On A House

Closing on a house is the final step in the home buying process. While it may seem like just a series of formalities, this is not the time to sit back and let everyone else deal with the nitty gritty details. As a future homeowner, it is your responsibility to be on top of all the paperwork and processes, and to know exactly what you’re signing.

It’s highly recommended that you go into closing with a real estate attorney. There will be many documents to sign and several buyer safeguards along the way. All this will be much easier to navigate with an attorney on your team.

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The first order of business, before any money changes hands and any contracts are signed, is to open an escrow account. Escrow companies function as a neutral third-party in the transaction to ensure that both you and the seller are protected should anything go wrong during the closing process.

Closing On A House Takes Time

Closing can take several weeks, but can stretch out much longer if you don’t stay on top of things. One of the biggest factors that can delay the closing process is financing issues. The vast majority of financing issues stem from buyers getting a little too relaxed after they’ve been preapproved for a mortgage – so relaxed that they begin racking up new debt on credit. This can send your mortgage back to square one, and you may no longer get approved for the same mortgage as you were before your debt-to-income ratio skyrocketed. Therefore you should avoid any large purchases on credit before closing, as it can seriously delay and possibly jeopardize the sale.

Before closing, the property you are intending to buy must be appraised by a professional. This is a requirement by the mortgage lender, as they will not be able to loan you more money than the home’s appraised value. If the appraisal comes back lower than expected, and no mistakes are found, you may need to renegotiate the selling price with the seller.

Additionally, you will want to get a professional inspection of the property and a thorough inspection report. This is to avoid any nasty surprises with the home itself after the sale, and any issues should be taken up with the seller well before signing any closing documents.

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What Happens After Closing On A House?

Once the mortgage details, inspection, and appraisal have been ironed out, you will need ensure that your future home has what is known as a “clean title.” This is done either by an attorney or a title company, and ensures that the seller is legally able to sell you the house. Title searches verify the legal ownership of a property, and a clean title means that there are no outstanding liens, unpaid taxes, judgements, or claims against the property. You will receive a title report, and any issues should be addressed with the seller before signing any paperwork. Even if the title comes back clean, you may want to consider purchasing title insurance to protect both yourself and the lender in case any issues arise in the future.

If everything is clear – clean title, no unresolved issues with inspection, and no changes in mortgage status – you can proceed with closing. On closing day you should have your attorney with you, come prepared with all documents pertaining to the sale, and have at least one form of photo ID. You will also need to bring a cashier’s check made payable to the closing company to cover any outstanding closing costs that will not be covered by the seller.

And that’s it! Once the papers have been signed and closing costs paid, the house is legally yours. Unless you agreed with the seller on a later move-in date, you can now begin moving into your new home.