Buying a home, whether it is your starter home, your forever home or your retirement home, is an exciting process. However, it is crucial for people to understand the process of closing on their new place of residence. The following is a brief overview of what to expect in the closing process.
Opening an escrow account
Escrow accounts are financial accounts held by a neutral third party for the benefit of both parties to the home sale. Money and documents related to the sale are held in the escrow account, preventing both the buyer and seller from misusing these funds.
It serves as a safe place to keep documents related to the transaction. After closing, the funds and documents in the escrow account are distributed to the appropriate parties, ensuring the entire transaction is secure.
Performing a title search
Through a title search, you can ensure that no one else has a claim to the property you wish to buy. In a title search, public records will be examined so that any existing claims can be resolved before the finalization of the home sale. Title insurance can be purchased to protect you from any losses suffered if the title to the home has defects.
Negotiating closing costs
Buying or selling a home costs money, pure and simple. Inspections, closing fees and other costs can quickly add up. Buyers and sellers need to negotiate who will be responsible for paying costs associated with closing.
Get a home and pest inspection
It is vital for buyers to obtain a home inspection and pest inspection, to uncover any problems with the home that they may want the seller to remedy before closing. Some sales contracts include contingencies that allow a buyer to back out of the deal if the seller does not fix problems uncovered in an inspection.
A real estate contract often carries contingencies — acts that must be fulfilled before the sale can be completed. Some common contingencies include obtaining a mortgage at a certain interest rate, having problems uncovered by a home inspection remedied and the seller completing any repairs the parties agreed to in the sales contract. A final walkthrough can ensure these contingencies were fulfilled and the home is in the agreed-upon condition for sale.