The Closing Process Explained: What Buyers and Sellers Should Know
What Is the Closing Process?
Step 1: Review the Sales Contract
To begin the closing process, the first step is to review the sales contract. This document outlines key elements such as the transaction price, the timeline for completion, and any necessary contingencies. Additionally, both the buyer and the seller should carefully read through the contract to ensure everything is accurate and clearly defined. This helps prevent any misunderstandings and ensures that all terms are properly understood.
Step 2: Plan a home inspection for buyers.
However, before the buyer can finalize the purchase, they agree to get an inspection on the house. A professional inspector will tour the property with a view of identifying case of any problem that could include structural problems or cases that may require some repair. This way when realizing that some issues are present the buyer can consult with the seller and come to an agreement that the issues must be worked out or control the sale price.
Tip: If possible go for the home inspection to have an idea of what is required to be done to make it presentable to the occupants. This is a good chance to gain more information about the house and to ask the inspector anything that comes to one’s mind.
Step 3: Get a Home Appraisal (For Buyers)
Usually the third step is to get a home appraisal, unless you are a buyer who is looking to find homes below market value and has the budget and cash to make a higher than market value offer.
In cases the buyer is financing the home through a mortgage, the mortgage provider will always need an assessment of the home. This is an assessment of the home’s value conducted by a licensed appraiser, and this is just an estimate. The appraisal makes sure that the home being purchased is of the correct value as that of the amount borrowed. If this is less than what has been proposed then there is need to negotiate and reach an agreement or the buyer requires more capital.
Tip: If the appraisal is low then there is no need to be stressed. Discuss with your real estate agent for ways on how to preempt the problem, for example, you can ask the seller to lower the asking price or request for a second opinion on the appraisal.
Step 4: Secure Financing (For Buyers)
After the inspection and appraisal, the prospective buyer must secure financing. This process involves providing any necessary identification that the lender may require, such as proof of income or undergoing a credit check. Once the lender approves the application, they will issue a loan commitment, which is essentially an agreement to provide the mortgage.
Tip: This is the ideal time to maintain your financial stability and avoid any sudden changes in your financial situation. Specifically, refrain from borrowing or applying for new credit, as this could negatively affect your loan approval.
Step 5: Perform a Final Walkthrough
The buyer is also allowed to inspect the home before the closing day and that process is known as the ‘walk through’. This is to make sure that the property is as agreed on as is in terms of physical condition before it is handed over or to check if all the repairs that he or she may have requested for after the inspection has been done. Closing; It is the final opportunity that the buyer has to ensure that everything is well before the deal is sealed.
Tip: When going for the walkthrough be sure to take along your contract as well as the inspection report.
Step 6: Review the Closing Disclosure (For Buyers)
A few days before closing, the lender presents the buyer with a Closing Disclosure. This important document captures the actual terms of the loan, including details such as the interest rate, monthly installments, and closing costs. The buyer should read this document carefully to ensure that all the details match those in the original loan estimate.
Tip: Use the Closing Disclosure to check for any inconsistencies. If you notice any discrepancies, inform your lender and request changes before closing to ensure everything aligns correctly.
Step 7: Prepare for Closing Day
On the day that the deal is finally going to be sealed, many forms will need to be filled and signed. The buyer will need to bring a few important items, including: The buyer will need to bring a few important items, including:
- A government-issued photo ID
- Proof of homeowners insurance
- A cashier’s check or proof of wire transfer for the closing costs and down payment
- The Closing Disclosure
The seller will need to bring:
- A government-issued photo ID
- The keys to the property
- Any garage door openers, manuals, or warranties for appliances
- A certified check if they need to pay any closing costs
Tip: There are other additional documents you may be required to produce at the closing or pay before the closing date; always consult with your closing agent or attorney.
Step 8: Join the Closing Meeting
Technically, the last meeting is convened at the office of a title company, escrow company or an attorney. During this meeting:
- The buyer will now sign the mortgage papers and the instrument note, the promissory note which will warrant the giving back of the loan.
- The nature of the deed will be that the seller will sign the document thereby passing the ownership of the car to the buyer.
- The down payment and the closing costs will be done by the buyer.
- Proceeds resulting from the sale will go to the seller.
After this there are several other forms that both the buyer and the seller will have to fill up like the closing statement showing all the expenses in selling of the house.
Tip: Never rush the closing meeting even if you have been engaged all day in the same process. And do not sign anything if you do not understand any of the things that is written there, just to have them explained.
Step 9: Recording the Deed
This step represents another significant activity in the project’s execution, as the project implementation team records everything they have accomplished throughout the completion of the project.
After all documents are signed, the title company or attorney lodges the deed to ensure the sale is officially recorded. Consequently, this action makes the change of ownership a matter of public record.
Tip: Once the deed is recorded, remember to request a copy of the final recorded deed for your files.
Step 10: Get the Keys!
Upon conducting the necessary search and subsequent entry of the deed into the Torrens Title, the buyer will then be handed the keys to the home. Congratulations! It means that this home is officially your home now.
Tip: It might be wise to change the locks and set new codes for access in the home as soon as one moves in if one wants to be extra safe.
Step 11: Moving In (For Buyers)
Now that you are equipped with the keys, it is time to start occupying the premises. First, change the locks for security purposes. Additionally, you must update your address with the post office and any other necessary services.
Step 12: Celebrate (For Sellers)
On the other hand, once the closing has been accomplished, the seller experiences a happy-ending moment. You have successfully shifted the ownership of your home, and the money you had in your account is now available. You can use this money for your next home, invest it, or simply save for the future.
Guidelines for the Closing Process
Do’s | Don’ts |
Do review all documents carefully. | Don’t skip the final walkthrough. |
Do attend the home inspection. | Don’t make large purchases before closing. |
Do communicate with your agent and lender. | Don’t ignore any discrepancies in paperwork. |
Do ensure you have all required documents. | Don’t rush through signing the paperwork. |
Do ask questions if something is unclear. | Don’t forget to bring ID and necessary checks. |
SUMMARY
Feeling overwhelmed by the closing process? Don’t worry, you’re not alone! But with a little guidance, you can navigate this final hurdle like a pro.
Here’s the lowdown:
- Stay organized: Keep track of all documents and deadlines.
- Communicate clearly: Your real estate agent is your guide. Keep them in the loop and ask questions whenever you need to.
- Understand the steps: Knowing what to expect can help you feel more confident.
Ready to tackle the closing process?
Contact Lesley tucker and break the deal together!
