Closing a Property?

Closing is the last stage in mortgage loan processing in which the seller transfers ownership of the property to the buyer. This procedure is overseen by a closing agent, who is generally an attorney or an official from a title or mortgage firm. It takes place at a title company or escrow office. The mortgage closing procedure differs by state. This is referred to as a closing because the escrow account used to finalize the property acquisition is closed. Participants in closure, also known as settlement or account settlement, review, authorize, and date several legal papers.

How it is used

When you buy a property, the seller will be required to provide you with various disclosures about the property before closing can take place. These disclosures may include information about environmental issues, zoning issues, and any other potential problems that could affect your decision to buy the property.

Good things about Closing

The first benefit of closing is that it provides a sense of closure for both parties involved. For example, sellers might feel relief after getting their money from the sale, while buyers may feel more confident about their purchase because they know they won’t have to worry about any future problems with the property. Additionally, buyers and sellers might not want to go through this process again for some time so it provides them with an opportunity to take a break from real estate transactions for a while.

Steps in Closing

Enter escrow: As there are so many processes involved in successfully closing a real estate deal, a neutral third party will protect all funding and documents involved in the closing process. Escrow protects both the buyer and seller from being taken advantage of during this period.

Conduct a title search and purchase insurance:

Running a title search and acquiring a title insurance policy assists purchasers in ensuring that the transfer of ownership will proceed smoothly at closing. In certain tragic instances, the title cannot be transferred if the seller is not authorized to do so. Buyers can have piece of mind by having a title officer undertake this search in advance.

Engage a closing attorney:

Because legal documentation related to the closing process may be fairly extensive, many purchasers will choose to hire a real estate closing attorney to get professional experience and representation in the event that there are any issues with the paperwork.

Secure a mortgage pre-approval:

By obtaining a mortgage pre-approval early in the home-buying process, buyers may guarantee sellers that they will be able to obtain a mortgage loan from their lender in time for closing. Also, getting a loan pre-approval expedites the closing process, and lenders will frequently give an interest rate lock at that stage.

Assess your closing costs:

Escrow providers will charge service fees to handle your closing. Buyers should, however, carefully analyze the detailed list of costs to see if there is potential to negotiate a cheaper price or delete any line items. Look out for ‘junk costs,’ which are typically negotiable, such as administrative fees, review fees, email fees, or processing fees.

Schedule a home and pest checking:

Although house and pest inspections are not legally required, they are strongly recommended. Have an expert check the property to verify that there are no hidden issues that might cause difficulties in the future. A home inspection contingency is often included in the purchase contract of many house buyers.

Try and negotiate the offer:

If the house inspections showed any problems and you included a home inspection contingency in your purchase contract, now is the time to renegotiate your purchase offer with the seller. You can either ask the vendor to lower their asking price or to pay for any necessary repairs. If the negotiation fails, the buyer will be protected if they want to withdraw their offer due to the house inspection condition.

Lock in your interest rate:

If the buyer did not previously lock in the interest rate on the mortgage loan during the pre-approval process, he or she will want to do so during the closing process. Because interest rates change on a daily basis, it is in the buyer’s best interest to keep track of rates and lock in the lowest available rate.

Lift real estate contingencies:

In order for your transaction to close properly, all real estate contingencies must be lifted in writing prior to your closing date. Work with your real estate agent to approve and eliminate any relevant conditions.

Transfer funds into escrow prior to closing:

To complete your real estate transaction, you must deposit your down payment and any pre-determined closing charges into escrow. When you signed the purchase agreement, you most certainly paid earnest money, which is normally allocated to the down payment. Make careful to confirm in advance if a wire transfer or cashier’s check is necessary.

Perform a last walkthrough:

Before the closing date and any final paperwork is completed, house purchasers should conduct one final walkthrough of the property. This is to ensure that no harm has happened to the property between walkthroughs and the closing.

Sign all paperwork prior to closing:

The final step occurs on the closing date. The buyer and seller will meet in person to finalize payments, sign legal paperwork, and transfer ownership.