A residential property transaction is generally a stressful process that involves many steps and procedural formalities. The house closing process happens once you sign the documents to make the house yours. However, you’ll have to go through a detailed list of things to occur before that victorious day arrives.
A real estate closing is the final procedure in the residential property purchasing and sales process. Before this step, the homeownership must be formally transferred from the seller to the buyer. The purchaser is free to start their move-in activity. So, you should prepare for any possible issues that might make it longer since the timeline might vary from the agreed-upon closing date.
In this article, you’ll learn the five significant steps for an effective home closing transaction.
Open an Escrow Account
An escrow is a contractual agreement in which a third party accepts and disburses property to the main transacting parties. With this account, buyers and sellers are protected throughout the home buying process as it holds funds for homeowners’ insurance and taxes. Escrow accounts include fees managed by agents who hold the assets until they receive necessary instructions from predetermined contractual obligations.
To open an escrow account for residential properties, you must find the right escrow service provider who can help you organize the whole process. Then, you should make earnest payments to the servicer to show that the transaction is serious and you’re ready to commit to the deal. After that, you need to start preparing the necessary documents to receive your escrow account number.
After opening an account, you can prevent yourself from being cheated on because you’re actively bringing in a neutral third party. This account holds all the finances and confidential documents related to the transaction, providing a safe mode of routing cash flows for you. In addition, this party refrains you from stressing over when it comes to paying large lump sum payments while it enables you to spread out annual costs over time.
Hire A Closing Attorney
While getting legal assistance is optional, this option will provide you with a reliable and accurate legal opinion on your closing documents. Since there is a lot of jargon in those papers, you don’t want to spend your time translating them into your language. Therefore, you need to learn the facts here now before hiring a well-educated closing attorney who can help you speed up the home closing deal by giving you legal assistance.
With the help of a closing attorney, they’ll effectively handle and finalize real estate property closing, which is essential for the end goal of the transaction. This professional will read through the whole transaction document and ensure that every detail is accurate to ensure you’re legally protected. Also, this person will be there to assist you in untangling the entire legal issue that might come up with your residential property once someone pulls its title report.
Another thing about real estate lawyers is that they are well-trained in using logic to back up their direct arguments to help you get what you want. Additionally, this individual can evaluate transaction-related fees to ensure that you’re not paying a penny more than you need to, which helps you eliminate unnecessary costs. As a result, you won’t have to worry about untangling a legal net that might keep you from successfully ending the closing process.
Have An Accurate Title Search and Insurance
A title search and insurance will give you legal protection and peace of mind throughout the real estate closing deal. What you must do is conduct the title search during the closing process to ensure that all documents are authentically related to the residential property. Meanwhile, a buyer’s title insurance offers protection after the sale against claims of ownership, which includes the financial and legal ramifications of the claim.
You still need these documents even if the home is newly built because a chain of ownership questions might come up after the property is transferred to you. If you’re fortunate enough to pay in cash, you won’t have to pay for mandatory title insurance since there’s no mortgage involved, saving you closing costs. However, you may still have to buy a title insurance policy to safeguard your stake in the property since you might lose in case of a title discrepancy.
Negotiate Closing Expenses
From opening a costly escrow account to hiring a well-educated real estate lawyer, these services and entities all cost a lot of money. Moreover, these expenses might increase if you aren’t careful with the process. For instance, services like home and pest inspections might take advantage of consumers’ ignorance by charging extremely high fees.
While some aspects of closing expenses are non-negotiable, there are some areas where you can get a significant reduction in fees. For example, you may lower the loan origination cost by asking your lender if any aspects of it can be waived, like processing and application fees. Moreover, be on the constant lookout for extra fees in the list of expenses at closing in any loan estimates you get by reaching out for clarification on why they’ve been added to the estimate.
Complete The Home Inspection Process
If you’re planning to activate a home loan, you need to go through a lengthy home inspection process because most lenders don’t offer financing on a home without this activity. These inspections can explore potential life-threatening issues, such as faulty wiring or mold that may cause a significant fire in your neighborhood. Once you’re done with the process, you’ll have a seven-day window to walk away from the purchase, protecting you from future property issues.
Normally, a home inspection takes place right after the seller accepts an offer from the purchaser. After that, you must contact an expert home inspector to ensure the process goes smoothly by seeing the damage firsthand. Also, consider attending the first home inspection day to ask questions and have valuable discussions so you can receive in-depth information about your new home.
Key Takeaway
As a soon-to-be homeowner, you must ensure that you’ll have sufficient protection throughout the closing process so you won’t face legal issues in the future. With that, you must follow this five-step process to have a successful home closing. Also, these steps will help you figure out if you’re buying a high-value residential property that protects your family from property-related issues in the future.
