Closing on a house is one of the most rewarding parts of the home-buying experience. It's the time when everything is settled, including all the fees, papers, and other necessary steps. It is officially the day you take over the property and have your keys to your new home, which marks a new beginning in your life.
The closing process is the final step of the lengthy home-buying transaction with real estate. It is when the purchase and sale agreement is signed and processed, and it usually takes at least a couple of months. It is the day when the ownership of the property is transferred to the new owner of the home, and the seller receives the proceeds from the transaction.
Closing requires the completion of many important steps. If the buyer is not paying in cash, they will need to secure a mortgage to purchase the property. There will also be a third-party inspector to inspect the home’s condition along with an appraisal of the property. Any repairs and costs will also be discussed and agreed upon, and the buyer will have a final walk-through of the property. Generally, when a final walk-through happens, all the belongings from the seller should have already been packed and moved.
On this day, all parties will be present, including the attorney to check and review the deal that will be signed upon agreement by both seller and buyer that finalizes everything. It usually lasts about 1 to 2 hours, depending on the current situation.
Factors That May Cause Delay On Closing
While it usually takes 2 days or less to complete the final transaction, there might be a delay in the closing process because of several reasons, such as low appraisal rate, contingencies, title issues, and problems with the mortgage.
- Low Appraisal – With the help of a home appraiser, a low house appraisal happens when the property has a lower value than the purchase price agreed by both the seller and the buyer.
- Mortgage Loan – The closing process might be delayed if the buyer fails to secure financing because of various reasons. This could affect the process and may also result in the deal being forfeited.
- Unfulfilled Contingencies – This happens when one of the parties fails to continue or back out from the deal, especially if the conditions talked about were not completed. There could be many reasons for the contingent, such as problems in the house revealed from an inspection or financing problems on the loan. It can delay the process, or worse, cancel the deal.
- Title Issues – Problems that may arise is the issue of the title of the property. The property should be free of any claims or doubts about the ownership. You must clarify if there are any liens or any claims to the property as these issues prevent closing unless cleared up.
How Long Does It Take To Close The House?
On average, the closing of a home takes about 30 to 45 days, starting from filling out the mortgage application loan until the closing table. Securing a mortgage is often one of the main reasons that delays the closing process. How long it takes to close a house will depend on how the transaction will go between the three parties -- the loan officer, the real estate agent, and the seller. To understand more, here are the steps that you and lender will need to complete before closing on a house:
Understanding Your Documents
Study, research, and list down all the documents you need. Also, make sure to remind yourself of all the necessary deadlines.
Organize all the documents required for closing, so it will be much easier to locate the files you need when someone requests them from you.
In addition, when giving documents, check everything first and mark your list to when you submitted and who received it, so you’ll know when someone asks again.
Common Closing Documents:
- Closing Disclosure – This document has the details of the mortgage. You will receive the form approximately 3 days before the closing day. It will give you ample time to review what’s written in the document.
- Loan Estimate – This document contains important details such as the terms, rates, and closing costs.
- Escrow Statement – The initial escrow statement will have payments from your lender containing pay from your escrow account on the first year of the mortgage. It may include taxes and insurance.
- Mortgage Note – This is a legal document that includes terms and conditions for both the borrower and lender, including the monthly payment, interest rates, and consequences for missed or late payments.
- Deed Of Trust – This document contains the agreement made with the lender at the closing property. It includes their right to claim your home if you fail to make payments on the agreed-upon terms.
- Purchase Agreement – This is a legal document that binds the buyer and seller. It includes the terms of the real estate transaction and finalizes the purchase of the property upon signing.
Reviewing these documents is important when closing on a house. Make sure that there are no discrepancies and that all details are correct before the signing.
Here are more tips to consider when closing a home:
Consider Hiring An Attorney – Getting a legal opinion from a professional is a must before signing any closing documents. They can help you understand the things or terms you're not familiar with. They can also help ensure that the closing goes smoothly.
Getting A Home Insurance Plan – Home insurance covers damages and other insurance-related deductibles. The cost will depend on the features you will get and your home's condition. Most lenders require buyers to get the insurance and show it during the closing.
Negotiate Closing Cost – Closing costs are the fees paid to lenders and other third parties to close on your loan. It includes several fees like appraisal, title insurance, and application fees. Close costs can be expensive, but some can be negotiable.
Confirm The Closing Date – It’s the date the seller will move out of the house. The closing date usually takes a month or longer after the purchase.
Final Walk-Through – Having a final walk-through before moving the house is an opportunity for a homebuyer. It allows you to assess the property before closing as sometimes, damages occur after the first inspection.
If anything needs fixing, you can request a repair before closing the deal.
The journey of closing a home takes a lot of effort and time, especially for beginners. However, knowing and researching the entire process will help you better navigate every challenge and is much better than hurrying to sign a deal and facing problems later on. Having an idea of the documents you need and preparing can also help prevent possible delays. Some professionals can help you ensure that everything will go smoothly and avoid going on a bad deal.
If you need help closing a home or you just want to learn the buying or selling process, our team at RE/MAX Advanced Realty - Indy Home Pros is here to help.
Call us at 317-316-8224 or leave your email in the comment box below so we can assist you!