Buying a house is an exciting, although sometimes exhausting journey. The final stage can be among the most stressful, but it doesn’t have to be. A little preparation and planning go a long way to making the closing process smooth. Here are the keys to expect on closing day and how to get ready for your closing date.

What is the Closing Process?

Closing is the final step in buying a home. It concludes with the closing date, when the buyer and seller sign all the necessary documentation to transfer legal ownership of a home.

How Long Does it Take to Close on a Home?

It takes between 30 and 60 days to close on a home. Sellers dictate a fair amount of the closing timeline simply based on their need to stay in the home. On the buyer’s side, the biggest barriers to closing are typically the ability to secure financing and scheduling for things like a home inspection and appraisal. Subsequent home inspections, like hiring a structural engineer to examine the foundation, a pest or radon inspection, could further delay closing.

Let’s break down the steps to close from beginning to end.

The Who, What, and Where of Closing

One of the first things to do after a seller accepts an offer is to choose who will conduct various elements of the closing process. In most areas of the country, that’s a title company, but you may also work with an escrow company, closing agent, or real estate attorney.

A buyer, or buyer’s agent, is responsible for this step. Referrals from real estate agents, mortgage professionals, and others you’ve met along your home buying journey are common ways to secure this step.

A title company will conduct a title search, which is a legal review of public records to determine who has legal ownership of the home and whether there are outstanding liens, or claims, on the property. If you are financing the home, you will likely be required to buy title insurance as well, which protects the buyer in the event of unknown forgery, fraud or mistakes with the home’s title.

Complete Earnest Money Deposit

A few days after a seller accepts your offer, you’ll need to complete the earnest money deposit, sometimes called a “good faith deposit”. These are funds, deposited into an escrow account, intended to show you are serious about buying the home. Escrow is a legal term for an account held by a third party that holds money until certain conditions are met, in this case signing the contract to buy or sell a home.

The size of the deposit varies,  but is typically between 1% - 3% of the purchase price of a home.

Schedule a Home Inspection

A general home inspection usually costs between $300 - $500. You will need to hire and schedule your own inspector, but can often rely on referrals from the mortgage company or realtor. You may also want to look for online reviews. Not all inspections are the same, and some home inspectors can be more thorough and helpful, particularly if you’ve never owned a home before.

Depending on the home, you may want to order additional inspections for things like pest infiltration, or the septic system that are outside the scope of a general home inspection. These will be additional upfront costs that you, the buyer, will have to pay.

Buyers can be present for the inspection. A few days after the inspection, you should receive a comprehensive report detailing any issues found during the tour. If serious issues are found you can work with the seller or renegotiate terms of the sale to fix them.

In competitive real estate environments, some buyers will opt to waive an inspection to help their offer stand out. You can still order a home inspection after waiving it, but you will no longer be able to use the results of the inspection as a contingency of your purchase.

Finalize Your Mortgage Application

Now it’s time to move forward with one lender and finalize your mortgage application. Your lender will inform you of any additional documentation needed to complete the application, which could include pay stubs, W-2s, tax returns, bank statements and other information.

The loan process will continue as you proceed through the following steps. Once the loan underwriting process has been completed your loan will be approved. You will receive a commitment letter from your lender indicating your final loan terms which you sign and return to your lender.

Get a Home Appraisal

While a lender orders a home appraisal, the buyer is responsible for paying the fee. Appraisals are independent, third-party assessments of a property’s value. The purpose being that lenders want to make sure the home is valued at a level covering their loan value.

Appraisers will inspect the interior and exterior of a home, and note basic amenities like bedrooms and bathrooms. They will also compare “comps”, or recent sales of similar homes in the area.

Find Homeowners Insurance

Homeowners insurance exists to help pay for losses or damages to your home and property if it is stolen or damaged. It covers the negative impacts from events like a fire, storm, or burglary. Lenders will require you to have home insurance as a term for your mortgage. Lenders want to make sure the asset backing the mortgage is safe from theft and disaster.

You can shop for insurance much like you found a mortgage. Online reviews, referrals, and word of mouth recommendations from family and friends will be helpful here.

 Do Your Final Walkthrough

Your final walk through the home you’re planning to purchase should be an exciting, albeit uneventful, affair. Buyers should check to make sure things have not changed substantially with the home. Unless specifically outlined in your negotiations with the seller, there shouldn’t be material changes to things like appliances or lighting in the home. Be sure there was no significant damage since you last inspected things.

If you did identify certain concessions from the seller, home improvements or repairs they are required to make, ensure those measures were completed. Then, it’s time to move on.

Review Your Closing Disclosure

Closing disclosures are legal documents given by lenders to borrowers. Mortgage companies are required to give you a closing disclosure at least three days before the closing date. The disclosure will contain final details about your mortgage loan, including the loan amount, projected monthly payment, terms, and closing costs.

Be sure to review your closing disclosure and compare it to the loan estimate you received. If you have any questions, seek clarification from the lender prior to closing.

Schedule Your Closing

Closing agents will coordinate with real estate professionals, attorneys, and the buyer and seller to find a time to conduct closing. There will be a lot of paperwork to sign so you’ll want to set aside a couple of hours to show up at the agreed upon location, review documentation, and sign.

Take Part in Closing

At close, you’ll need to bring several documents with you. The closing agent will likely go over this list with you ahead of time, but the items could include:

• A copy of your homeowners insurance
• Home inspection reports
• A copy of the contract with the seller
• Government-issued photo ID
• Cashier’s check or proof of wire transfer for closing costs and down payment
• A checkbook for other additional costs

You may be required to bring additional documentation to satisfy your purchase contract with a seller or to fulfill mortgage loan terms. Being in close contact with your closing agent, real estate agent, attorney, and mortgage professional ahead of close can help make the meeting smooth and surprise-free.

In terms of the forms you’ll sign that day, here are some of the most common:

• The closing disclosure
• Mortgage, or promissory note
• Escrow account statements and documentation
• The deed
• The title

Carefully review all documents you sign that day. You might feel like you’re slowing things down, but that’s fine. Confirm the terms of your mortgage, and ensure all information, like your name, is correct on the paperwork. Discovering issues now can save a boatload of headaches later on.

Grab Your Keys and Be a Homeowner

Congratulations! You are now a homeowner. In addition to the keys, here are a couple of things to grab right away:

• Update your address with the postal service and organizations that send you mail
• Make copies of all your closing documentation
• Set up utilities like electricity, gas, and internet
• Change the locks
• Say hello to neighbors

How Can I Speed up The Closing Process?

Buying a home is a time intensive process. There are many parties to be brought together and details to be sorted out before deals can close. That said, there are ways you can quicken the process if you’re looking to buy a home fast.

• Get pre-approved for a mortgage: Ensuring you have secure financing not only makes your offer potentially stronger in the eyes of a seller, it also quickens the closing process because you can move faster through the loan approval stages.
• Be flexible on your closing: When you’re dealing with so many parties coming together there is bound to be scheduling conflicts, cancellations, and other difficulties. If you can remain flexible and find time in your schedule to keep the calendar on track it’ll improve your chances to close on time, or ahead of schedule.
• Bring in lots of help: Working with professional real estate attorneys, agents, and bankers can help you avoid pitfalls and address issues before they become larger problems that would otherwise slow your schedule.
• Have cash at the ready: Closing on a home takes cash. Having the funds necessary in an easily accessible account, like checking or savings, can help avoid delays that are caused by long transfer times between financial institutions.
• Be communicative: In the end, many issues that hold back closing dates are caused by good old fashioned missed emails, calls, and texts. Try and stay on top of communications to keep things moving on time.

The information provided here is for informational purposes. When interest rates and loan program information are included, it is for illustration purposes only and not a solicitation or quote for services. This is not an advertisement or loan estimate. Current interest rates, loan programs and qualification criteria can change at any time. If you have questions or need assistance, we can be reached using the contact information above. Union Home Mortgage Corp. does not provide tax, legal, credit repair, or accounting services. The information provided is generally true but may not apply to you or your situation. For tax or legal advice please consult an appropriate professional in one of these fields.