All About the Process of Closing on a Home
So, you’re finally in the final stages of securing your home. This means you’re in the process of closing and there are some important steps you will need to take. Here is everything you need to do before you can close on your home.
Escrow Account
You will need to open up an escrow account to hold any funds associated with the sale. These funds will be held by a third party; a bank or escrow agent, for example. This is to keep all money safe until it is time to release it.
Inspect the Property
It is a good idea to bring on an inspector to look through your home before signing any papers. They will be very thorough and look into everything to make sure that the home is safe and livable for you and your family. You should also hire another inspector to come in and check for pests of any sort. Also, many lenders actually require inspections as a stipulation before they approve your loan. They do not want to fund a property that has any significant health and safety issues such as a termite infestation. If an issue like this arises, you will have to take care of it before the mortgage lender will finalize the closing process.
Consider Renegotiating
Sometimes buyers will find problems with a new property and these can be used as leverage to get a better price. However, if you have agreed to a contract that involves purchasing a property “as is,” you will not have this power. The seller does not have to pay to have issues fixed or lower the cost accordingly in this case. They are not even required to pay for an inspection of the home. You can always try, but just know that the seller has no obligation to accommodate your wishes.
Secure Your Mortgage
The process of getting approved for a mortgage is not a quick or simple one. You need so many financial records such as tax returns, income proof, bank statements, and other documents that can speak to your financial stability. It is a good idea to get preapproved before you begin looking for a home. This will make things much easier when you get to the final steps of the home buying process. You can also secure your interest rate so that it won’t fluctuate with the market.
You Need an Appraisal
The vast majority of lenders will make you get an appraisal on the home to assess its value. This is so they can avoid fronting the money for a home that is worth less than its asking price. If the appraiser determines that the home is worth less than the purchase price, they will not fund your loan. The appraisal needs to be the same or higher.
Hazard Insurance
You need insurance on your home, and you will need to secure your title as well. A title agent can assist you in making sure that no one else can claim ownership of your property unexpectedly and they can also check for any preexisting problems.
The Home Stretch
When you get approved for funding, your title agent will provide you with an official date and time of closing. They will inform you of all that you will need to complete the process. You will also get information on what your responsibilities will be as far as paying back the loan, the costs due at closing, and other important information. You should have a lawyer or real estate agent take a look at your final documents before you agree just to make sure you understand everything fully. Sometimes, the seller might even cover your closing costs for you.
Double-Check Everything
Before you sign on that dotted line, make sure that you take a final pass through your home to ensure that everything is in order and that nothing has changed since you began the home buying process. Once you have determined that everything is in good shape, the money in escrow will be released and put towards the down payment. Then you will simply have to pay any required closing costs. The home buying process is quite a long one and closing on a home can come with many stressors. Being informed and prepared is a necessity, especially during the closing phase.