A Helpful Real Estate Closing Checklist for Buyers
To begin, let’s sketch out the major steps:
- The Seller Accepts Your Offer
- Schedule the House Inspection
- Complete the Mortgage Loan Process
- Work with a Title Company
- Prepare for Closing Day
- Schedule Your Move
- The Final Walkthrough
- The Document Signing
- The Exchange of Money and Keys
We believe that any above-average real estate agent and title company will walk you through these steps as you face them, but we also think you need to know what will happen. After all, your money and future will be on the line with this major purchase — and it’s your home.
The Rundown of Events in a Real Estate Closing
We hope you enjoyed the home shopping process. Working with top-notch real estate agent who can introduce you to homes that fit your style and budget is the key to a successful experience. In between visiting multiple houses and possibly putting in multiple offers, it can take a few months to find THE right home for you. But once you do, that’s when the closing process kicks into high gear.
1. The Seller Accepts Your Offer
Simply put, the current owner has agreed to the amount of money you’re willing to pay to buy their home. This price might change a bit down the road — especially once the inspections come through — but right now, you are officially the buyer for the home.
2. Schedule the House Inspection
If you’re buying, you need to understand what you’re getting into with the property. Just because the current owner is OK with its current conditions doesn’t mean you should be when you take ownership. There are two primary inspections you should hire professionals to conduct on your behalf:
- Home inspection: A review of the major components of the home.
- Pest inspection: A review of the major areas where pests could attack a home, specific to the more common ones in your location.
Most buyers are present for the home inspection but not the pest inspection. Additionally, you need to confirm whether the home inspector you hire will check the heating, ventilation, and air conditioning (HVAC) system for the house. If not, you’ll need to hire a separate inspector for this work, as you must be made aware of any HVAC repairs the home might require after you buy it.
It’s important to hear the unvarnished truth about this property before you continue with closing. Some people don’t like what they hear from the inspection — specifically if there are levels of home repair you as the buyer wouldn’t want to complete once you owned the place. In this instance, you could retract the offer completely.
3. Complete the Mortgage Loan Process
Before you started looking for your home, you should have been pre-approved for a loan so you know how much you could afford to spend on a house. Now that your offer has been accepted and you like the results of the home inspections, you need to complete the mortgage loan process with your bank or lender. This includes steps such as:
- Home appraisal: Conducted by your lender for their records
- Homeowner’s insurance: Purchased by you so it’s active the instant the home is yours
- Credit report: Making sure your financial health remains stable after the pre-approval process
- Underwriting: Determining the exact terms of the mortgage
- Locking in the interest rate: Securing the final details of your loan
When people ask why the real estate closing process takes so long, it’s because the banks and lenders have to get all the financial ducks in a row to ensure the transaction is successful.
4. Work with a Title Company
Well, hello there! Patten Title is excited to see you today. As a title company ourselves, our job is to clear the legal and financial roadblocks that sit between you and your new home. This occurs in three basic steps:
- Title search: We investigate the history of the property to ensure there are no competing claims on the title, and if there are, we take care of them for you.
- Title insurance: You purchase this insurance to protect yourself from adverse title claims.
- Escrow: We negotiate the relationship between you, your lender, and your mortgage to guarantee the health of your finances.
We will be present for the rest of the real estate closing process, right up through the closing day to answer any questions you might have.
5. Prepare for Closing Day
As soon as your loan is approved by your lender’s underwriters, it’s time to get everything in order for the closing day. You want to make sure everything is ready and all obstacles are removed. This means securing all of your closing documents and closing costs.
- Closing notice
- Closing disclosure
- Credit report
- Closing fee
- Title search
- Insurances on loan
For more information about this topic, check out our article, “Common Closing Costs for Buying a Home.”
6. Schedule Your Move
This one seems obvious, but more people forget this step than you might think, especially in the rush of collecting paperwork and money to buy the house. If you want to live in your new home, you need to get your stuff ready to move out of your current one. Be sure to transfer your utilities to your new place!
7. The Final Walkthrough
It’s almost time to take possession of your new home, but first, you should revisit the property with a trusted advisor and the inspection report in hand. Since money hasn’t changed hands, you still have time to back out of the deal if something makes you nervous. This is not the time to feel obligated to go through with the deal — it’s the time to be extra-critical about the property before you become the owner.
8. The Document Signing
All of the rumors you’ve heard are true. You will sign a thick stack of paperwork when closing on your new home, and your hand will get tired doing so. Amidst all of those documents, there are four that are truly crucial to the entire process:
- Settlement statement: A declaration of how the funds will be collected and distributed
- Promissory note: A statement describing the specific terms of how you’ll pay your mortgage
- Mortgage: The actual document delineating the financial terms of your homeownership
- Deed: The proof that you’re the person who owns the home
The rest of the documents are important, but they are subsets and offshoots of the big four. With any luck, you should be accompanied on the closing day by your real estate agent and the closing agent from your title company in case you have any questions, comments, or concerns about what you’re signing. Some people even bring along their personal attorneys to provide an extra layer of protection, information, and advice.
And don’t feel embarrassed if you choose to read each document before you sign it. You want to make sure everything is in order before you undertake the big financial responsibility that is owning a home.
9. The Exchange of Money and Keys
Once everything is signed, sealed, and approved with the document signing, it’s time to give your funds to the appropriate persons and then receive the keys to your new home.
Congratulations! You’re now a homeowner!
A Few Items After Closing Day
There are two key tasks that remain after you take ownership of your new home. One is obvious, while the other might require a bit of assistance.
1. Moving In
If you scheduled your move back in step #6, you should get ready to move into your new home. This includes either packing and moving your stuff yourself or paying a moving company to do help with one or both of those tasks.
The exception to this would be if you purchased your first home with the idea of repairing it and flipping it. In that case, it’s time to call in the general contractor and get to work.
2. Apply for the Homestead Exemption
With very few exceptions, every homeowner should be able to apply for and receive this legal coverage. In short, the homestead exemption protects the homeowner from their house being sold out from under them in the case of bankruptcy or the death of a spouse. It’s specific to property tax relief in these extreme situations, and it’s designed to provide essential assistance to the homeowner in their time of need.
The Last Word in Our Buyer’s Guide to Real Estate Closing
At Patten Title, we’ve helped individuals and families all across the great state of Texas purchase the home of their dreams. We’re an experienced title company that goes the extra mile to help you effectively navigate the often confusing waters that come with buying a home. Not only do we specialize in client engagement, but we have close ties to the real estate and financial services communities. Our goal is to ensure that you start your homeownership experience on the best possible foot.
If you’re already exploring properties to find the home of your dreams, tell your real estate agent to talk to Patten Title today!