Buying your first house is a monumental moment; you feel excited, nervous and delighted to move into your dream property finally. But you have to get through the closing process first.
If it is your first time buying a house, you may have no idea what to expect from the closing process. Luckily, there are some general guidelines to implement for a smooth transition into your role as a homeowner.
Be overly prepared
Closing on the house is a lengthy process, and there multiple components that you need before signing the final contract. First, consult with a financial advisor and a realtor about the estimated closing costs. Most first-time buyers underestimate the costs of closing a house. In Alabama, the closing costs on a $200,000 home are $2,112.It may be a substantial cost to have after purchasing a house.
Next, you need the find an attorney to read and decipher any problematic language in the closing documentation. A closing attorney also guides the process and ensures you receive the best deal for the property.
Have the right documentation
Several essential documents for closing include:
- Loan estimate – paperwork that discusses your loan, interest rates and closing costs.
- Closing disclosure – an outline of your mortgage
- Initial escrow statement – a form about payments to the lender during the first year of your mortgage. It includes taxes and insurance.
- Mortgage note – a promise to repay the mortgage. It also includes any terms of the loan.
- Deed of trust – a companion to the note and gives your lender a claim against the home if you do not fulfill the mortgage note.
- Certificate of occupancy – a form that is only applicable to newly constructed homes.
Once the documents are completed and signed, you are one step closer to becoming a new homeowner.
Conduct a final walk-through
Right before closing on a property, buyers should do a final walk-through of the home. A final walk-through allows you to verify that all agreed-upon repairs were made, the seller left the house and the property is what you expected.
If there are any severe issues, you can delay the closing date until the problems are addressed – whether it is repairs or letting the seller vacate the premises.
Don’t assume it’s a guarantee
Unfortunately, a falling out during the closing process is relatively common. There could be problems on the buyer or seller side, especially if the seller stays in the property. The best strategy as a buyer is to expect no guarantees. Until the final document is signed and the key is in your hand, it is not your property.
To ensure the closing is final, make sure you, as a buyer, are completely prepared with the right representation and documentation. With the right expectations, you can fulfill your role quickly and efficiently.