Finally closing on a house is an exciting time, but it can be a little daunting. You’re finally on the final leg of purchasing a home, so you want to make sure everything works out correctly.
To make sure there is no stone left unturned, here is a brief overview of what home buyers should expect during closing.
What is Closing?
Closing is the final step that you will take before purchasing a home. On closing day, you will officially become the owner of your new home.
Typically, once your offer has been accepted by the home seller, a closing date will be determined, where you will become the owner and receive the keys.
This, however, is all dependent on your real estate agent, lender and title agency finalizing your contingencies, loan and title.
How should I Prepare for Closing?
The biggest thing that should be done to prepare for closing is to ensure you are in constant communication with your team, and you are providing them with all the necessary paperwork in a timely manner.
Some tasks that need to be completed before closing include:
- Home Inspection
- Unless otherwise specified you have 10 days to complete the inspection(s) and submit in writing a corrective proposal, or form 35r.
- Your lender will schedule the appraiser
- Finalizing All Loan Documents
- Within three business days after completing your loan application, your lender will give you a Loan Estimate that should reflect the particular loan you discussed – including all terms and associated costs due at closing.
- Three business days before closing, you’ll receive your Closing Disclosure, laying out the terms of your loan including an itemized list of fees associated with the closing.
- Review your closing disclosure closely. If you note any large variations from the estimated costs your lender originally provided, reach out and ask questions.
- Performing the Final Walkthrough
- Schedule Your Buyer Signing Appointment
How Long Does it Take to Close?
The average time it takes to close on a home is 41 days, but you can close in as little as 7 days if you are paying cash. If you are financing and are fully underwritten by your lenders underwriters then you can close in as little as 2 weeks.
Studies have shown that up to 32% of house closings are delayed and almost half of them are due to financial issues.
Often times this is due to the buyer changing or loosing jobs, or a change in credit report such as a major purchase or a missed payment.
The Key To Closing On Time Is To Make Sure You Have The Right Representation
The right real estate agent will keep up with all your contingency dates and keep the transaction moving forward smoothly.
The right mortgage broker will have paired you with the best possible loan program that you qualify for and will manage the loan through the process to ensure that all the underwriters needs are met.
The right escrow closer will ensure that all documents are collected, signed and all fees are collected and sent off for recording on time.
The right attitude will ensure that you are delivering all documents requested truthfully and timely.
Other factors that could cause a delay include:
- An issue popping up in the home inspection
- The appraisal not matching to purchase cost
- HOA Problems
- Neighborhood Review
Sometimes, if a home inspection does not come back as you had hoped, an additional bargaining chip that can be offered is a home warranty plan to cover any future damages or replacements that will arise after the purchase has been made or use the warranty to performs any current repairs that need to be made.
How much does it cost to close on a house?
You can expect to pay three to four percent of the purchase price of your home in closing costs.
So, on a $400,000 house you should expect to pay between $12,000 and $20,000 in closing costs in addition to your down payment.
These costs typically include:
- Application Fee
- Appraisal fee,
- Credit report fees,
- Escrow Fee
- Origination Fee
- Property Tax
- Recording Fees
- Title Search
Keep in mind, however, that you can use closing costs as a bargaining chip when negotiating the price of the home, by requesting that the seller pay part of all of your closing costs when you purchase the home.
What do I bring on Signing Day?
Typically your escrow closer will schedule you to sign the final documents a few days before the closing date.
This can be done by going into their office, or a mobile signer can be sent out to you if that is more convienent.
Thankfully, your escrow company closer and mortgage loan officer will provide you with a checklist of everything you need to bring, outside of what they are already bringing.
Typically, what you will need is your:
- Photo identification
- Any outstanding documents for the title company or mortgage loan officer
- If you have not scheduled a wire transfer, a cashier’s check for the closing company with the total amount of the closing costs due
- Your checkbook for the difference between the estimated balance owed and the final amount
- A well rested signing hand
A lot of signatures will be made on signing day, but thankfully that is because you are about to obtain the keys to your new home!
You can expect to pay any remaining closing costs due, you will sign all pertinent documents to transfer ownership of the house to you, you will sign a settlement statement that lists all costs related to the home, a mortgage note promising you will pay the loan and a mortgage deed of trust that will secure the mortgage note.
What happens on closing day?
It is possible that signing day and closing day are the same day, however it is generally a day to 3 days after you signed.
Escrow packages all the documents up and sends them over to county to be recorded. This often takes places around 11 or 12 in the afternoon.
Once County recieves the documents they need to record them and will get a recording number, a unique number given by the county recorder’s office to a properly executed legal document thereby making it part of the public record.
It is common practice that at this time the Selling agent and Buying Agent will exchange the keys and your buyers agent will schedule a time for you to receive the keys.
However, according to the NWMLS purchase and sale page paragraph F:
At a minimum you will receive the keys and access to your new by 9pm of the Closing Day.
We are attempting to outline the closing process as it typically occurs, however, the process can deviate due to any number of issues that may arise. Remember to remain flexible during this process, and to stay in touch with your real estate broker, loan officer, and closing agent regarding the status of your closing process.