The Closing Process

This is the final portion of a series of 7 articles that guide potential buyers through the home buying process. These articles provide insight and suggestions to help homebuyers find the home of their dreams.

Step One: Get Your Finances In Order
Step Two: Find An Agent
Step Three: Get Pre-Approved For A Home Loan
Step Four: House Hunting
Step Five: Make An Offer They Can't Refuse
Step Six: Secure Your Home Loan

The closing process is the last step before you move into your dream home, keys and all. Your offer has been accepted, your home loan has been secured and you’re already started getting your closing paperwork in order like your homeowner’s insurance, title insurance and appraisal.

Closing is a process which means there are several steps to follow before ownership is yours. To begin, you and the seller or your agents or attorneys, you will write up a purchase agreement based on mutually acceptable terms and conditions for the transfer of home ownership and that will be put in escrow.

Escrow is simply a neutral third party (usually a company) that holds funds and documents until each and every prerequisite of the purchase agreement is met. The escrow process and closing usually takes about 30-45 days.

Remember your dream home isn’t officially yours or the sale “closed” until the grant deed is date-stamped by the county clerk which marks change of ownership of the property. By following our tips on closing you’ll be able to keep you cool, get prepared and sail through the closing process with grace and ease.

Tip 1: You will have to put down a good faith deposit

A good faith deposit or earnest money gives the seller assurance in the closing process. You will put this earnest money is escrow as a way of committing to the home sell and assuring the seller you are a serious buyer. The money you put down now will eventually roll over into your down payment. However if you walk away from the home sale for a reason that’s not a contingency in your purchase agreement, then your deposit is forfeit. If the seller walks away for any reason your money will be returned and escrow is closed.

If you followed the steps laid out in this serious then everything should be lined up perfectly. You’ve already got your loan approved which means there should be no more financial hiccups or problems. Your lender will provide you with a good-faith estimate and will also include fees and costs which make up your closing costs. It is law that your lender must provide you this estimate within 3 business days of your application.

Tip 2: Put contingencies into your purchase agreement

When you’re putting together the purchase agreement with the seller, it’s crucial to make contingencies to protect yourself and your interests. Contingencies protect you from future events or circumstances that might occur but are not certain. For example, you may have a house you need to sell before moving in this new one so you could make closing your own home sale a contingency in the contract.

Here are common contingencies any home buyer should include:

• Your loan is approved with an affordable interest rate and mortgage payment
• Home inspection comes back clean with major problems or the problems are fixed
• Pest inspection reveals no infestations or they are cleared and the seller makes all necessary agreed upon repairs.

Contingencies protect you from the unknown, those terrible unfortunate situations we didn’t think would happen. That’s why it’s crucial to sit down with your agent and come up with any and all contingencies that you need to feel safe and secure about your home purchase.

Tip 3: Take a check to closing

The closing process isn’t over when you sign all of the paperwork but that should be when your portion of it is completed. After you sign all those mountains of paperwork then it’s up to the escrow company to review it all and get that grant deed legally changed to reflect your ownership.

Review your loan documents so you know how much money to bring to closing so you’re ready with the check. Also, you will most likely need to get your check certified by the bank so plan to stop by before you’re closing date. Wire transfer is an option also but could actually delay the closing. Usually wire transfers make more problems instead of solving them.

Of course the day of you also need to be on the lookout for typos in the mortgage documents and any inconsistencies in paperwork. Everything should be in order but you must account for human error – it happens, especially when there’s so much that needs to be present and in order like at closing.

The closing process is a long and lengthy process with lots to remember. Help yourself succeed and work with an agent to be your guide and keep your home purchase on track. Email us at clientservices [at] firstteam.com or call 888-870-1142 and we’ll connect you with a top agent in your area.

Buyers - What questions do you still have about the closing process?

Agents - What tips do you have for buyers to prepare them for the closing process?

 Originally posted at: http://www.firstteam.com/blog/?p=7755