If we’re about to close on your house, congratulations! After sifting through home listings, ensuring your offer was competitive, and jumping through financing hoops, your offer was accepted on a house that’s just right for your family. But…the keys aren’t yours just yet— let’s stay on our toes! Be your family’s home-buying hero by knowing exactly what to expect when closing on a house.
What Is Closing and When Does it Happen?
Closing is the final step—before that house is finally yours! Your closing date is the day you become the legal owner of your new home.
During the contract negotiation phase, you (the buyer) and the seller set a closing date, which must be listed on the purchase agreement contract. After the seller accepts your offer and earnest money—money given to secure the contract—you can expect to wait a while before your actual closing date.
How to Prepare for Closing on a House
Does that mean you can sit back and let everyone else handle the details until then? No way! Take a deep breath. You still have some serious ground to cover before closing on a house. Here’s what you need to do:
Let’s Gather Our Team
We need solid team on our side – I will help you gather a network of valuable
team members you may need like:
- Escrow officer
- Mortgage professional
- Home inspector
- Attorney
- Title insurance agent
How Long Does It Take to Close on a House?
The average process for closing on a house takes 41 days. Why does thehome closing process take so long? Well, home transactions tend to encounter some type of delay or hang-up before closing. And a common delay is caused by buyers borrowing more money before their closing date, which complicates their credit. Another reason closing could be delayed is if you aren’t upfront with your lender about all your payment obligations (like child support). This could change your debt-to-income ratio—which means more recalculations.
Closing Problems That Cause Delays
Buckle up. It’s time to prepare yourself for other potential delays that could hang up your ability to close on a house. These problems could happen any time after your offer—even up to and including the day of your closing.
Appraisal Problems
It’s possible an official appraisal could be lower than expected. Appraisers use comparable home sales to calculate a home’s value, and in some areas,home prices are rising so fast that those comparable sales haven’t caught up. You may also end up with a low appraisal if the home you’re buying has
features that aren’t typical for the neighborhood.
But more often than not, a low appraisal is a warning sign you may be paying more than the home is worth. No matter the cause, your lender can’t approve a loan amount for more than the appraised value of your home. If you do end up with a low appraisal, you have a few options.
Loan Problems
If you made your offer on your new home before you were preapproved for a loan, your bank will now begin digging into your finances to determine how much they’re willing to lend you. This could go really well—or terribly wrong.
Say your offer is on an affordable home with a down payment of 10% or more; then you’re probably in good shape to get approved for a 15-year, fixed-rate mortgage with a payment of no more than 25% of your take-home pay. In this case, you’ll be able to pay off your mortgage in a reasonable amount of time. Any other loan option is a bad idea.
Too many buyers fall in love with homes they can’t afford. And lenders will do their best to “make your homeownership dreams come true,” but they’ll do it with rotten financing options like adjustable-rate mortgages or piggyback loans. Even a simple 30-year, fixed-rate mortgage is a rip-off that will cost you
tens of thousands more in interest and keep you in debt for decades!
Ideally, you need to be preapproved for a mortgage (not just prequalified) before you begin shopping for homes. That way you know your exact price range, and you won’t make offers on homes you can’t afford.
Home Inspection Problems
Nearly every home inspection—even those on new homes—will turn up some issues. Some are minor and can either be ignored or resolved by further negotiating the terms of the purchase contract. However, some issues like insect infestations or water damage are warning signs you can’t ignore.
Neighborhood Problems
If the first time you saw your potential home was also the first time you ever visited that neighborhood—buyer beware!
Take steps between now and closing to make sure you’re buying a home in a quality neighborhood. Closing is final and you need to make sure there are no hidden issues. Drive through on different days at various times of day. Dopeople seem comfortable visiting together outside their homes? Are kids
running around? Is there construction nearby?
Walkthrough Problems
Imagine if—during the final walkthrough—you find something that’s been damaged or you notice the seller removed something that was supposed to stay. The process to resolve these issues could delay your closing date.
Paperwork Problems
On closing day, you’ll sign your way through 50–100 pages of paperwork. After weeks of waiting, you may be tempted to breeze through all the confusing legal jargon just to be done. Read each page thoroughly, and don’t be afraid to ask questions if something doesn’t add up.
How Much Does It Cost to Close on a House?
Closing costs are the fees third parties charge when you finalize buying your home; these costs usually include the home inspection bill, premium for homeowners insurance, appraisal fee, credit report charges, attorney expenses, and so forth. Be mindful that you’ll need to pay some of these fees
before the actual closing day (earnest money, home inspection).
On average, you’ll pay 3–4% of the purchase price of your home in closing fees. For example, if your home costs $300,000, you might pay between $9,000 and $12,000 in closing costs.
What Do I Need to Bring on Closing Day?
To make sure everything runs smoothly, you’ll need to bring a few things to your closing appointment.
- Photo ID
- Outstanding documents or paperwork for the title company or mortgage loan officer
- Certified or cashier’s check made payable to the title or closing company for closing costs that aren’t being deducted from the sales price
What Happens on Closing Day?
If you bring everything you need on closing day, get ready for a John Hancock party! Here’s what to expect:
- You’ll pay any remaining closing costs, as listed in your Closing Disclosure.
- The seller will sign documents to transfer property ownership.
- You will sign a:
- Settlement statement that lists all costs related to the home sale.
- Mortgage note stating your promise to repay the loan.
- Mortgage or deed of trust securing the mortgage note
After that, the title company will register the new deed in your name. It sounds simple, but be prepared for a ton of paperwork!
Where Does Closing Take Place?
For your closing appointment, you’ll likely meet at the office of the escrowee. The escrowee will probably be the title company that legally secures your ownership of the house.
Who Attends the Closing of a House?
Depending on where you live, those at your closing appointment might include you (the buyer), the seller, the escrow/closing agent, the attorney (who might also be the closing agent), a title company representative, the mortgage lender, and me.
How Long Does It Take to Move Into a House After Closing?
You might be able to move into your new house as soon as the closing appointment ends—unless the seller asked to stay in the house for a length of time after closing (as with a rent-back agreement). The move-in date should have already been determined and detailed in the contract.