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Home Closing Process

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by

Taylor Mitchell
in

Buying a home is an exciting journey filled with important steps and decisions. From choosing the right settlement company to securing homeowners insurance, each phase brings you closer to holding those keys in your hand. Let's walk through this process together, ensuring you're well-prepared for every milestone along the way.

Preparing for Closing

Choosing the right settlement company or real estate attorney sets the wheels in motion. This neutral party orchestrates document signings, verifies compliance with the purchase agreement terms, and ensures funds are correctly disbursed. Ask your real estate agent or friends for referrals.

Get your homeowners insurance ready. It's not just about protecting your belongings—it's a lender requirement. Rates vary based on your home's value and location, but expect to pay around $1,100 annually. Organize this early to avoid last-minute stress.

Title insurance is another must-have. While your lender will require a policy to protect their investment, consider getting your own policy too. It's a one-time fee that covers you if someone makes an unexpected claim to your property. The average cost is around $1,000, but shopping around can save you money.

Key Steps Before Closing:

  • Meet loan conditions (clear title report, appraisal, proof of income, homeowners insurance)
  • Start packing and prepare a moving plan
  • Review your Closing Disclosure carefully
  • Conduct a final walk-through of the home
  • Gather all necessary documents

After closing, consider filing a homestead declaration to protect your new home. This can provide benefits like reduced property taxes and protection from forced sale in some bankruptcy cases. Check with your real estate agent or county assessor to see if this applies to you.

A couple discussing homeowners insurance options with an agent in a modern office

The Closing Day

Closing day is when everything comes together. The usual attendees include the closing agent, your real estate agent, the seller's agent, a representative from the lender, and potentially attorneys for both you and the seller.

Key Documents You'll Sign:

  1. Closing Disclosure: Itemizes all costs involved in your loan and home purchase.
  2. Promissory Note: Your written promise to repay the mortgage.
  3. Deed of Trust (or Mortgage): Secures the promissory note.
  4. Deed: Officially transfers ownership of the property to you.

Be prepared to pay closing costs and escrow items with a cashier's check or wire transfer. Review all documents carefully, checking interest rates, payment schedules, and your personal details.

Once everything is in order and funds are transferred, you'll receive the keys to your new home. Congratulations—you're officially a homeowner!
New homeowners signing closing documents with their real estate agent and lender representative

Potential Closing Delays and How to Handle Them

Even as you approach the finish line, issues like low appraisals, unmet contingencies, or title problems can cause delays. Here's how to handle them:

Low Appraisal:

  • Negotiate with the seller to lower the sale price.
  • Consider paying the difference between the appraisal and sale price out of pocket.
  • Request a re-appraisal, providing evidence to support a higher value.

Unmet Contingencies:

  • For inspection issues, ask the seller to fix problems or lower the price.
  • If financing falls through, quickly secure another lender or have a backup loan pre-approved.
  • For seller's contingencies, like finding a new home, stay in communication and consider offering a lease-back agreement.

Title Issues:

  • Ensure you have a solid title insurance policy.
  • Work with your title company or real estate attorney to resolve any liens or ownership disputes quickly.
  • Maintain clear communication with all parties to address surprises promptly.

Remember, every challenge is just part of your home-buying journey. Stay focused, work with your team, and soon you'll be settling into your new home.

A concerned couple reviewing a low appraisal report with their real estate agent

By following these steps and staying proactive, you'll navigate the closing process smoothly. Each step brings you closer to turning that house into your home. Happy home-buying!

  1. National Association of Realtors. Profile of Home Buyers and Sellers. Washington, DC: NAR; 2021.
  2. Consumer Financial Protection Bureau. Your Home Loan Toolkit: A Step-by-Step Guide. Washington, DC: CFPB; 2020.
  3. American Land Title Association. Homeowner's Guide to Title Insurance. Washington, DC: ALTA; 2019.