If you have never bought a house then there might be some terms you have heard but don't know what they actually mean. One of these terms is the act of closing the home. It's a common term, but you might not understand what it actually means or entails.
What is closing and what can you expect to happen during the closing of your new home?
What is Closing?
Closing on a home is the actual transfer of the property title from the previous owner to the new owner. The home is not officially yours until all paperwork is signed and the checks are handed over to you, the new owner, and the bank or mortgage lender.
Have Your Paperwork Ready on the Day
Before you head to either your lawyer's office or your new home for the closing of the house and to take ownership of the property, you need to have your paperwork ready. This includes your loan estimate, proof of the title search for the property to ensure no one else can claim ownership, and proof of insurance.
You could also have your proof of flood insurance (if the home is in a floodplain), homeowners insurance, mortgage insurance, the home appraisal, and inspection reports. This is in the event you may need to refer to them during the closing.
The Day of the Closing
On the day your home closes, you will be taken on a tour of the home and property. This is to ensure that the former owner has vacated and left the home in the condition agreed upon during the negotiations of the sale. If the home isn't in the condition it's supposed to be, you could ask for an extension of the closing to ensure all repairs and cleanup is done.
Once your tour is done, you will then sign all legal documents related to the sale. There are two agreements you will need to sign.
The first one is the agreement between you and your lender; this will include the terms and conditions of your mortgage. The second part is the agreement between you and the seller of the home; this agreement is the official document that transfers the ownership of the property from them to you.
Always read each document carefully and have your lawyer (should you have one with you) take a look at them before you sign either document.
Once all the documents are signed, you will then hand over your checks to pay for the escrow items and closing costs. These costs can include mortgage fees and property transfer fees. Some of these fees will be paid via a separate check and others might be included in the loan balance--such as with the mortgage.
Now that you have a better understanding of the closing process, you are ready to begin your search. Look for homes for sale in your area and don't forget to contact a real estate company for additional help.