13 Steps to a Successful Real Estate Closing
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The term “real estate closing” includes a process of specific steps in the home buying process. From the time that the buyer and seller reach a purchase agreement until the time of the closing, there are several steps that should be followed to ensure that the property's ownership is transferred lawfully and smoothly.
Here are thirteen steps to a successful real estate closing:
Set up an escrow account: Escrow is when a neutral third party retains the funding and documents involved in the closing process to ensure everything is accurate in the transaction before it is complete. Escrow protects the buyer and seller during the home purchasing process.
Determine Property Ownership: In order to determine and confirm a property’s legal ownership, there must be an examination of public records to determine if there are any claims on the property. A title search entails a search for deeds, contracts, and other documents to make sure the title is "free and clear" of any defects.
Purchase Title Insurance: Title insurance protects the insured from financial loss related to the title of the property. There are two policies at a home loan closing: the lender’s policy, and an optional owner’s policy. Lenders require title insurance to protect their interest in the loan. Owners have the option to purchase title insurance to protect themselves from title defects that arise after the closing that could at the least incur legal fees and, in the worst-case scenario, may result in a loss of the property. Both are a one-time upfront fee.
Hire a closing attorney: There are numerous legal documents that must be signed during a real estate closing and some can be complicated. Buyers and Sellers often hire a real estate closing attorney to help protect their interests, to address any issues at the closing immediately, and to ensure all the appropriate closing documents are filed with the proper state and county authorities.
Get pre-approval for your mortgage: A mortgage pre-approval prior to your real estate closing shows the sellers that you have your finances in check and that you won't be denied a mortgage if they decide to sell you their home. Pre-approved loans help the closing process move faster, and often lenders will offer to lock in a lower rate to facilitate a smooth closing.
Determine closing costs: Closing costs may include fees related to the origination and underwriting of a mortgage loan, real estate commissions, taxes, insurance premiums, title, and record filing. Escrow companies will often charge a service fees for managing your closing process. Prior to your real estate closing, you should carefully review the itemized list of charges.
Schedule a home inspection: Many home buyers include a home inspection contingency in their purchase contract to ensure there are no surprises. Standard inspections include a review of the heating and cooling system, interior plumbing, electrical systems, roofing, doors, windows, walls, and foundation.
Renegotiate the offer: You can often renegotiate your purchase offer with the seller if the home inspections revealed any issues. If the seller does not agree to drop the purchase price or to pay for any necessary repairs, the buyers can choose to withdraw their offer and still be protected under the home inspection contingency.
Secure the mortgage interest rate: If the rate of mortgage interest was not locked in through the pre-approval process, the buyer should do so during the closing process. Interest rates fluctuate daily, so you should monitor rates to lock in the lowest rate possible.
Lift real estate contingencies: Any real estate contingencies that were put into place must be removed in writing before your scheduled closing.
Placing funds in escrow: To finalize your real estate purchase, you will need to deposit your down payment and pre-determined closing costs into an escrow account. Usually, a wire transfer of funds or a cashier check is required.
Do a final walkthrough: Before the date of closing and any final paperwork is signed, homebuyers should do one last walkthrough of the property.
Sign Closing Documents: On the date of closing, the buyer and seller's parties will meet in-person to make final payments, sign the legal documents, and officially transfer ownership of the property.
Homestead Title is a full-service title and escrow company. Since 1934, we have provided our customers with competent, thorough, and professional service. Prior to each closing, we search public records to clarify legal and financial risks for lenders, realtors, and other stakeholders in the real estate transaction process. Our energetic and capable team of real estate title professionals provide accurate investigations, rapid turnaround time, streamlined paperless delivery, and exceptional customer service. For more information, call us at (504) 581-6427 and let us provide you with a smooth and efficient real estate closing.