You’ve bought a house! — or, you almost have. You have carefully selected and evaluated your new property, agreed on the pricing with the sellers, and now you cannot wait to have the keys in hand to start decorating, painting, and planning for this brand-new chapter in life. There is just one last step to undertake—the closing process.
The closing process may be unfamiliar terrain, but with 88% of all home purchases in 2019 going to first-time buyers, be assured that you are not the first one to navigate this final step to homeownership [1]. Let’s look at what to expect as you close on your new home.
The Good News
While there is a lot to do to secure full ownership of the property, the good news is that the professionals will guide you on what steps to complete and when, and they will complete the majority of the paperwork. A word of caution here — educate yourself on the process and read every document thoroughly to ensure that you have a hand in protecting yourself and your financial future. Don’t just sign on the dotted line no matter how much you trust your representatives!
Who are these professionals that will be involved? You may interact with:
- Real estate agents
- Legal representatives
- Bank representatives
- A property title officer
Know your team, read your documents, and always remember that at the end of this process you will have secured your home legally at the agreed-upon price.
Steps to Completion
Before the paperwork is signed and the keys are in-hand, a few items must be finalized.
These include:
- Home Inspection and final appraisal: completed by neutral parties that will provide you with valuable information you may need to decide to sign or walk away
- A final walk-through: completed within 24 hours of the legal and binding transfer
- Title clearance: a process to ensure that the property is legally available for transfer of ownership by the intended seller
- Mortgage approval: by this final stage your financial institution will have already evaluated your creditworthiness and have given prior approval for your home financing
- Arrangements for the down payment and various fees: your bank and real estate broker should clearly list out the exact amounts that you will need to be prepared to pay upfront at the closing meeting
- Insurance coverage: obtain documented proof that insurance has been arranged for the home and property
- Papers, Papers, and More Papers
Pen in hand, you are now ready to sign! Taking ownership of a home is a big step, one that comes with many legal documents to protect both you, the seller, and the bank. This is a necessary part of the process so look at it as the final hurdle to your goal of homeownership!
What types of forms will you sign? A few examples include a title transfer, promissory note and other financial documents, a truth in lending statement, and a declaration of reports (to verify you are aware of the appraisal and inspection findings).
Don’t be discouraged at the length of time and complexity of the closing process. Rather, carefully take each step one at a time and let your excitement grow as you get to the final step—the one to your new front door!
1. National Association of REALTORS® 2019 Profile of Home Buyers and Sellers