-
Buying a home? What happens between signing the contract and closing?
Most all potential home buyers are familiar with looking for homes online and scheduling a visit to view interesting properties with their realtor. Once you pick the home that is right for you, your agent will guide you through completing and submitting a purchase contract.
But what happens after the contract is accepted?
The National Association of Realtors (NAR) just published an excellent summary of the activities that happen between signing the contract and closing on your home.
Agents, please share this Consumer Guide with your clients!
nar.realtor
Consumer Guide: Steps Between Signing and Closing on a Home
Once you sign a purchase agreement on your new home, there are still several steps to complete before you can finalize—or “close”—the transaction.
-
1 Reply
-
Of course! Here is a moderate explanation of the events that normally transpire between when the purchase contract is signed and the transaction’s closing. This can assist prospective buyers to have an understanding of the timeline and the full process:
- Contract Acceptance: Finally, please sign this contract. After you submit your offer to purchase the property, the purchase contract takes effect once the seller accepts your offer. The transaction contract should be signed and distributed to both parties.
- Earnest Money Deposit Moving forward: Lastly, to ensure that you show genuine interest in purchasing the property, you will have to make an earnest money deposit, which is usually a percentage of the purchase price. This deposit is usually kept in an escrow account.
- Home Inspection Stating the Facts: Verify home conditions by setting up a home inspection to check the possible situations that need to be resolved. This will allow you to negotiate repairs or credit with the seller, after which you will review possible changes depending on the outcomes.
- Appraisal Verification: An urgency arises with one of your lenders. An appraisal is needed to highlight the value of the property in return. This secures the lender as it makes sure the house that is collateral for the loan is up to standards.
- Financing Approval Closing the deal: Complete the final steps of your mortgage application with your lender. This may require you to submit further documents, such as payslips and bank statements, to validate your funding source.
- Title Search
Title Company: A Title Company will first ensure that the property’s title is clear by searching if there are any existing liens or claims. This is vital in establishing clear ownership of the property.
Homeowners Insurance
Obtain Insurance: You must get a homeowners insurance policy before closing a house. Lenders always need this document to secure their investment.
Closing Disclosure
Review Financials: A few days before closing, a Closing Disclosure will be forwarded to you. It contains the monthly expected payment, the amount sent, and the closing cost. Please read this through very well.
Final Walkthrough
Inspect the Property: The final walkthrough is done to ensure that the property is in the agreed condition and that all repair work directed prior to taking over has been done.
Closing Day
Sign Documents: The three parties meeting on closing day are the seller, you, and your agent, along with an attorney, if possible. They will sign the official documents necessary to close the deal. These include the documents related to the mortgage and the deed.
Funding: The loan will be completed when the documents are signed, and the lender pays, after which the sale is said to be made.
Post-Closing
Receive Keys: You are now the legal owner of the property. Therefore, you will receive the house keys upon completing all processes. Planning how to set up the utilities and move in is wise.
As I said before, there’s more to the story than just closing—there’s a bunch of stuff in between. Typically, it includes three activities: inspection, appraisals, and financing. Knowing this sequence of events helps reduce the stress of buying a house. If you have any questions or need further explanation, why not contact me?