Buying your first home is an exciting process. It starts with browsing for properties within your budget, identifying one, and engaging in negotiations until you agree. However, you still have to complete the real estate closing process.
It is the last step in the home-buying process and involves formally transferring the property from the seller to the buyer. To help navigate the complex legalities involved, it’d be wise to hire a closing attorney for the transaction. Here is more information on the real estate closing process to guarantee a seamless transaction.
The Closing Process Explained
The closing process is a crucial step in real estate sales. Simply, it is the time between you signing the purchase and sale agreement and when both parties agree. The closing day is when the buyer takes over property ownership while the seller receives proceeds from the transaction.
Note that there are several steps involved before the closing day comes. The buyer must secure the money to buy the property, appraisal by a third-party inspector is necessary, and all additional costs settled. Here is what happens during real estate closing:
Enter Escrow
Real estate deals are executed under escrow to ensure safe and smooth transactions. Escrow is a third-party service dedicated to keeping track of the buyer’s finances and all the documents involved in the transaction. They collect and hold the buyer’s money until the seller takes their home off the market, ensuring all parties are fairly incentivized.
Secure Funding
Some buyers rely on external funding to finance the property purchase. The closing process allows you to finalize your mortgage application, allowing lenders to review and approve your loan. Before approval, the underwriter must confirm proof of money deposits, verify your financial information and review your property appraisal.
Get an Appraisal
The lender will request a home appraisal before approving your loan application. The appraisal should feature a certified appraiser’s unbiased estimate of the property’s value. Mostly, lenders don’t approve mortgages more valuable than the appraised value.
Note that it takes around ten days to get an appraisal report. Buyers should also insist on home inspection certificates to protect themselves from substantial, superficial repairs.
Title Search and Insurance Purchase
Completing a title search during the closing process is crucial as it helps identify any claims or liens on the property. It ensures no legal complications with ownership after the transactions are over. You’ll need a closing attorney if the property’s title is defective or has a cloud.
If the title search comes clean, buy the property insurance. Title insurance protects the property buyer from future financial loss if another party contests ownership. Note that insurance is also a lender requirement for homeowners before closing.
Release Contingencies
You can waive contingencies as part of your offer. If you didn’t, the real estate closing process allows you to actively approve contingencies in writing or passively by not protesting a predetermined deadline. These contingencies include:
- Financing contingency
- Appraisal contingency
- Title contingency
Closing Day
The closing day is when you’ll sign all your final paperwork. It includes the mortgage note, deed of trust, and escrow disclosure. You’ll also have to pay your portion of closing costs. Note that the meeting ends with your name on the property’s title, making you the legal owner.
The real estate closing process is lengthy and intense for both the buyer and the seller. It’d help to consider professionals like closing attorneys to help with all the legalities for seamless transactions. Your real estate agent will also help walk you through the process, providing valuable insights. They ensure you see the closing day, hold the keys to the property, and enjoy your home.
We are not lawyers and this is in no way intended to be used as legal advice . We cannot be held responsible for your results. Always do your own research and seek professional legal help.
Meg is an author at Cinnamon Hollow. She writes on a variety of topics sharing tips and ideas for daily life.