Most people know that closing is the final step in buying a house, but the exact closing process remains a mystery to many of them. Closing does, of course, involve the signing of a bunch of documents, but there’s much more to it than just putting your name on the dotted line. In fact, the closing process actually begins long before that final day when the papers are signed and money changes hands. So let’s see if we can move toward an understanding of the closing process from a buyer’s perspective in .
General Closing Process Timeline
So when does the closing process in begin? It begins, according to industry experts, “right after the seller accepts your purchase offer. That typically 30 to 60 days before your actual closing date – assuming a loan underwriting snag, low appraisal, or major defect discovered during a routine home inspection doesn’t delay the deal. During this period, the sale of your home is said to be ‘pending.’ If it’s customary in your market to make a substantial deposit . . . into an escrow account, once your offer is accepted, you may also refer to the closing process as the escrow period.”
What this means, then, is that there is a lot happening in the days just before the actual closing date. Here’s what typically takes place in the week before you close:
- You receive a Closing Disclosure from your mortgage lender a few days prior to closing. This document delineates how much you (the buyer) will have to pay in closing costs.
- You have to get “a cashier’s check in the amount stated in the disclosure.”
- In some cases and in some states, you may have to “wire the money to the title/escrow company, instead of paying via cashier’s check.
- You obtain a copy of the homeowner’s insurance policy (or an insurance “binder”) to bring to the closing.
- Sometimes, “last-minute underwriting issues might also be resolved during the week before closing.
Still, it’s only after you officially close on the property on that final day that you can move into your new home. And, as we mentioned, a lot has to happen first among all the parties involved between the time your offer is accepted and the transaction is finalized. In addition, the actual steps in the closing process can vary slightly from state to state, so let’s examine the typical closing process in
Usually, the process is handled and overseen by an escrow agent, “a person (sometimes an attorney) who specializes in handling real-estate closings and preparing the related documents.” And here’s a rundown of the typical steps . . .
- The buyer shows up at the closing with a cashier’s check in the amount of the remaining costs and fees.
- Ownership of the property is transferred by the owner signing over the property title to the buyer.
- “The closing agent (or in some cases a lawyer or notary) will register the new deed with the appropriate government office. After that, the homebuyer will be listed as the official owner of the property.”
- The real estate agent(s) will be paid their commissions.
- After the mortgage balance and closing costs are taken care of, the seller will receive her proceeds from the sale.
This rather involved closing process in is all built on many pertinent legal documents, many of which are signed at closing. As a buyer, you may find yourself signing a dozen (or even more) documents before everything is finalized. The good news, though, is that most of this is handled by the escrow or closing agent who gets all these documents ready for your signature.
The most important and most common documents include:
- Bill of sale
- Property deed
- Mortgage agreement and note
- Transfer tax declaration
- Closing disclosure
Preparing for the Closing Process in
All of the above simply means that you absolutely should not go into the closing without making the necessary preparations. (Your agent can be a valuable asset at this stage. To find out more, just call 866-593-7012.) As a buyer, the most important steps to take to prepare for closing and make sure everything goes off without a hitch are:
BEGIN SAVING EARLY
Buyers typically have to pay several costs on closing day, so here’s what the real estate pros recommend. These costs “can easily add up to thousands of dollars. So it’s a good idea to start putting money aside early on. The sooner you start, and the more you can save, the better.”
PAY ATTENTION TO THE CLOSING DISCLOSURE DOCUMENT
This document includes all the pertinent details about the transaction, including home loan information, the number of monthly mortgage payments, and closing costs. It will let you know exactly how much you will have to pay at closing because it includes an itemized breakdown of costs and fees.
HAVE CASHIER’S CHECK OR WIRE TRANSFER READY TO GO
Most often, closing costs are handled by means of a cashier’s check, but sometimes a wire transfer will be used. Just be sure to consult your mortgage loan officer and escrow agent to find out the amount and the best method.
STAY IN TOUCH WITH YOUR CONTACT PEOPLE
Certainly, questions and maybe even obstacles will arise. It’s a good idea, then, to stay in touch with and consult your real estate agent, loan officer, and escrow agent. Experts recommend being proactive: “The week before, send each of them an email and ask if there’s anything else they need from you.”
Use Your Agent
If the closing process sounds complicated and complex, that’s because it is. Your best bet for a smooth closing is to lean heavily on the expertise of your local real estate agent.