Buying a house is one of the biggest things you might do in your life.
The final step in the process is typically the closing. Once you reach this point, it can be a relief because you’re through the arduous underwriting process, but what should you expect when you’re closing on a house?
The closing date is usually decided during the contract negotiation. It’ll be listed on your purchase agreement. A seller accepts your offer, the earnest money is paid, and then, at some point you’ll have your closing.
A closing date can be weeks or months after the formal acceptance of your offer, depending on how much time is needed to complete the deal. Being prepared can speed up the process.
Go Over Your Closing Contingencies
If you have a good team on your side, the closing process should go pretty smoothly.
You will need to make sure all the closing contingencies are completed.
These often include the home inspection and appraisal, the completion of your loan documents, and the purchasing of homeowners’ insurance.
The final walkthrough is usually scheduled 24 hours before closing. This is not the same thing as an inspection. Your agent should schedule your final walkthrough. During this time, the seller should have removed all their belongings.
The condition of the home should match what you agreed on—otherwise, let your agent know.
Common Problems That Delay Closings
As was touched on, to get to a closing date can take weeks or even months. Knowing what some of the most common hurdles are can help you avoid them. Some of the things that often delay the closing date include:
• Appraisal problems
• Loan issues—preapproval can help you avoid this
• Problems with the home inspection
• Issues that arise during the walkthrough
• Problems with the paperwork
Once you make it to your closing date, there are closing costs. These are fees charged by third parties before the purchase of your new home can be finalized.
Closing costs tend to include appraisal fees, attorney expenses, and your premium for your homeowners’ insurance.
Overall, the closing fees usually come out to anywhere from 3 to 4% of the purchase price of your new home.
Your lender should send you a Closing Disclosure at least three business days before your closing date. This will tell you all the terms and costs, as well as who pays what and to whom it’s paid. Go over these costs carefully and make sure they match what you received in your Loan Estimate.
What Happens on the Day?
Once you arrive at your actual closing day, you’ll need to bring your photo ID, any paperwork or documents that are still needed for the mortgage loan officer or title company, and a certified or cashier’s check. The check needs to be made payable to the title or closing company. The check is for any closing costs that aren’t deducted from the sales price.
On closing day, you’ll pay any remaining closing costs that you should already be aware of based on your review of your Closing Disclosure.
The seller signs documents transferring ownership of the property.
You will sign a few things, including a settlement statement that outlines all the costs related to the sale, a mortgage note saying you promise to repay the loan, and a mortgage or deed of trust. Then, a title company registers the deed in your name.
Once you close on your new home, you may be able to move in as soon as the paperwork is completed unless the seller has asked for different terms, but those will already be in your contract.