Closing a real estate deal is the final step in buying a house, and can be a complicated and often stressful process. There are many things that need to be taken into consideration, and a long list of things need to happen before you can get hold of your new house keys. Knowing what to expect when closing is key to avoiding common pitfalls, and there are a few steps you will need to take to ensure the process runs smoothly.

Open an Escrow Account

An escrow account is in effect a contractual agreement in which a third party handles the money and documents required to close a house sale. There is a lot of red tape to be navigated during the closing of a real estate deal after signing the purchase agreement, and large sums of money are involved. Having a neutral party holding the funds and important documents eliminates the possibility of foul play, and warrants a fair deal for both the buyer and the seller of the property. Recording important meetings with your relater and lawyers is another way to avoid confusion, manipulation or miscommunication.    

Title Search and Insurance

Before you can own a property, it is advisable to employ the services of a title officer. Their job is to do a thorough title search and make sure that nobody else has a potential claim to your property. Title insurance provides peace of mind and eliminates the possibility of a third party claiming ownership of and invalidating your claim to the property. For example, a relative of the last owner might make a claim on your home on the grounds of being left out of a will, or a tax collector might show up asking to be paid. If such a situation does occur, it pays to find out about it on time so that the problems can be resolved before the property comes into your ownership.

Lawyer up

Getting professional legal assistance is a smart move when closing a house deal. Closing documents can be complicated and difficult to understand. An experienced and professional real estate lawyer will know exactly what to look for in your paperwork and spot potential issues in the contract before they become a problem.

Closing Cost Negotiation

Escrow companies can try to take advantage of their customers’ inexperience or ignorance by charging bogus fees. Junk fees you should look out for include settlement fees, appraisal review fees, administrative fees, application review fees, ancillary fees, email fees, processing fees and settlement fees. If you stand your ground and do your research, you can most likely reduce or eliminate junk fees from your contract. Even if there are no perceptible junk fees, negotiating a price cut can do wonders for your bottom line.

Do a Home Inspection

Although this is not a contractual necessity, performing a home inspection is a smart move. If you find a serious problem with your property, it can be grounds for a price correction on the part of the seller. If the problem is serious enough you might even consider backing out of the deal altogether in order to avoid exorbitant repair costs. The same applies to pest inspection. Wood destroying pests can wreak havoc on a property, and are a structural disaster time bomb. If a pest problem is discovered, mortgage companies will request you fix it before you can close the deal.

Lock Your Interest Rate

A good lender will closely monitor interest rates for you, and advise you what the best time for locking your interest rates is. Try not to fixate on locking rock bottom rates, as advertised minimal rates might not always be possible. Credit rates may vary greatly depending on credit score, the type of loan in question, geographic region and a variety of other factors.

In Conclusion

Even though closing can be an overwhelming process, with many variables and hundreds of pages of paperwork to be processed, the hardest part is waiting. Patience is the most important part of closing a home deal. Rushing can result in unexpected expenditure and a sub-optimal deal. Choose your team of experts carefully and leave the bulk of the process to them. Last but not least, be sure to read the fine print. 

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