Overview of the Closing Process

WHAT IS THE CLOSING PROCESS?
The closing process is the final stage of a real estate transaction where the ownership of the property is officially transferred from the seller to the buyer. It involves a series of steps that culminate in the signing of documents, payment of funds, and transfer of title. This guide will walk you through each stage of the closing process, from the initial agreement to closing day, ensuring you are well-prepared and confident as you transition to homeownership.

GETTING READY FOR CLOSING

1. Review the Purchase Agreement: Carefully review the purchase agreement provided by the seller to ensure all terms and conditions from your offer have been met. This includes contingencies, repairs, and any agreed-upon adjustments. Leverage the Shay Agreement Review Tool to review the document you receive. Make sure you consult a real estate attorney before your final review.

2. Secure Financing: Confirm your mortgage approval with your lender and ensure all necessary paperwork is in order. This includes finalizing loan terms and conditions and locking in your interest rate.

3. Conduct a Home Inspection: If not already completed, schedule a home inspection to identify any potential issues that need to be addressed before closing.

4. Obtain Homeowners Insurance: Purchase homeowners insurance to protect your investment. This policy is typically required by lenders before they will finalize the mortgage.

5. Title Search and Insurance: Arrange for a title search to verify the property’s ownership history and obtain title insurance to protect against potential title defects. You should search for local title companies in your area via Google or Yelp. 

6. Schedule a Final Walkthrough: Reach out to the seller or the seller's agent to schedule a final walk through. Conduct the final walkthrough of the property to ensure it is in the agreed-upon condition and any negotiated repairs have been completed.

Preparing thoroughly for closing ensures a smoother process and helps prevent last-minute surprises or delays.

NAVIGATING CLOSING COSTS & FEES

1. What are Closing Costs? Closing costs are the fees and expenses associated with finalizing a real estate transaction. They typically range from 2% to 5% of the purchase price and include various services required to complete the sale.

2. Common Closing Costs:

   • Loan Origination Fees: Fees charged by the lender for processing the mortgage application.

   • Appraisal and Inspection Fees: Costs associated with assessing the property’s value and condition.

   • Title Insurance and Search Fees: Expenses related to verifying the title and obtaining insurance.

   • Attorney Fees: Legal fees for reviewing documents and overseeing the closing process.

   • Recording Fees: Charges for recording the transaction with the local government.

   • Prepaid Expenses: Costs such as property taxes, homeowners insurance, and mortgage interest that are paid in advance.

3. Understanding Your Loan Estimate: Review the Loan Estimate provided by your lender, which outlines the estimated closing costs. Compare it with the final Closing Disclosure to ensure accuracy.

4. Negotiating Closing Costs: In some cases, buyers can negotiate with the seller to cover a portion of the closing costs, or they may be able to shop around for services to reduce expenses.

Understanding and preparing for closing costs ensures you have the necessary funds available and helps avoid financial surprises at closing.