You’ve searched and looked through plenty of houses before you decided on a particular one. Selecting the house of your dreams is such an exciting moment, but thinking about closing the deal involves many steps and procedural formalities that can make the whole experience a bit long and stressful. Closing on a house occurs when you sign the papers making the house yours, but you must learn and understand important things before that moment arrives.
A long list of things has to happen, so look below at the step-by-step guide in order to be prepared.
Explore your options and think about closing costs
Choosing the right house is not an easy task, and thinking about all the closing costs can be confusing and stressful. Learning about the process beforehand, and understanding all the steps you need to take to prepare and close the deal can be an advantage.
Choosing an experienced real estate agent will give you peace of mind, and they can greatly help with things like home inspections and guide you through legal and administrative costs. Note that if you’re thinking about asking for a mortgage, you need to get pre-approved before your start the closing process.
Opening an escrow account and hiring an attorney
Opening an escrow account is important to make the home closing process much smoother. It is managed and owned by a third party, not related to the buyer or seller, and it holds all of the money and documentation until the transaction is complete. It’s a great process to eliminate conflict during the real estate closing process.
Although legal aid is optional, it is still highly recommended to ensure that everything is going in your favor. An experienced real estate attorney will help you find issues in the paperwork, with the property, and other important things you might not have seen. It’s a good idea to invest in legal help not only through the home buying process but also the home selling process if you’re ever on the other side of selling a property.
Title search and insurance
Title search and title insurance are important because they provide legal safeguard and peace of mind. By looking into public records you’ll be ensured the seller is who they say they are, and that they have the right to sell you the property. Also, a title search ensures that when you purchase a property, no one can try to claim it later.
On the other hand, title insurance protects the holder from financial losses from defects in the property title. It protects the lenders and real estate owners from any defects, liens, or encumbrances on the title. Note that your real estate agent will likely order this for you, and the cost will be paid at closing.
Negotiating
All involved services and entities such as opening an escrow account, hiring an attorney, and conducting a title search and insurance, cost money. These costs can snowball into a lot of cash if you’re not being too careful. You must keep these fees in mind as you enter into negotiations, and if you’ve hired a real estate attorney, you can use their expertise to find hidden fees through the paperwork.
Some of the fees include junk fees, which a lender imposes at the closing of a mortgage and are often unexpected. They include administrative fees, appraisal review fees, application review fees, processing fees, and more. Note that home and pest inspections are crucial to prevent you from purchasing a property with hidden and probably costly problems.
Home and pest inspection
A home inspection is a necessary part of the closing process because this way you can discover any potential problems with the property, and get a look at the surroundings. If you happen to find problems during your inspection, you’ll have an opportunity to back out of the deal or ask the seller if they can fix it.
Pest inspections are separate, and they involve a specialist to ensure that your new home does not have any wood-destroying insects like carpenter ants or termites. Keep in mind that small problems can turn into mishaps fast, so you need to make sure you’re protecting yourself as well as your new home.
In closing
Before you start your final walkthrough before closing the deal, you might also want to consider locking in your interest rate and removing contingencies. Don’t forget to meet funding requirements as well since failure to do so can lead to the sale getting canceled and your earnest money going to the seller. Educate yourself about the whole process, and ask for help from experts so you can understand and handle the process better.
