The process of closing on a house in 11 steps – MSN Money

The process of closing on a house in 11 steps – MSN Money

© Jetta Productions/Getty Images
Jetta Productions/Getty Images

Closing on a house marks the beginning of a new chapter, but the final step before becoming a homeowner includes lots of documents, signatures and fees. Here’s a closer look at the home closing process and how long it will take to make those keys yours.

1. Hire a real estate lawyer

Buying a house isn’t just a transaction between the buyer and seller. It’s also a relatively complex legal process. To help you navigate the process, you may benefit from hiring a real estate attorney who can ensure the closing goes smoothly. This is usually optional, but having a lawyer on your side can help you avoid unexpected issues down the line.

2. Open an escrow account

Most homebuyers open an escrow account during the start of the closing process, which is typically managed by the title company. This account holds all the money associated with the sale, like an earnest money deposit, before you officially close on the house. When closing ends, the mortgage provider distributes the funds to the seller and buyer respectively, ensuring a secure transaction.

3. Run a title search

Run a title search on the property you are purchasing early in the closing process. A title search will bring up any issues with the title, such as an existing lien or unpaid property taxes, which could jeopardize your legal right to buy and live in the home. Also consider buying title insurance during this time, which would cover the cost of title claims during your ownership.

4. Get a home inspection

Getting a home inspection is an important part of closing. Even the most beautiful houses can have hidden issues.

During a home inspection, a contractor or professional inspector will check the home for major issues, like foundation cracks, leaks, problems with the plumbing or electrical system, and potential safety hazards. Depending on the results of the inspection, you might decide to back out of the deal or you can ask the seller to fix the issues as a contingency of the sale.

5. Negotiate your closing costs

Closing costs are the fees and expenses you must pay before becoming the legal owner of a house, condo or townhome. You can expect to pay 2-5 percent of the mortgage loan in closing costs. These can include:

  • Origination fee
  • Underwriting fee
  • Appraisal fee
  • Credit report fee
  • Title search fee
  • Recording fee
  • Transfer taxes

Although closing costs can be expensive, some costs are negotiable. See if your lender is willing to lower the origination fee or waive an application fee. If lender’s title insurance is required, ask your mortgage company if you can shop around to find the best rate rather than paying a fixed fee from the insurance company of their choice.

6. Remove contingencies from the purchase agreement

If you added any contingencies to the purchase agreement, now …….


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