The Closing Process

Once you’ve found the perfect home, it’s time to make an offer. A buyer and seller must enter into a written contract called a “purchase contract.” Typically the process begins with the buyer’s written offer to the seller. Your Real Estate Agent or attorney may wish to use a standard form to draft an offer and present it to the seller or the seller’s Real Estate Agent.

Once both parties have agreed to the terms of the offer, and the seller has signed the offer and communicated acceptance, an offer becomes an executed contract. You’ll need to address the next steps quickly in order to close on time.

Earnest money is a cash deposit the buyer gives the seller via a third party intermediary, usually a real estate agent, attorney or title agent. This deposit proves you are serious about purchasing the property. Typically, the earnest money deposit is credited to the purchase price at closing.

You'll need to notify your mortgage lender as soon as you have an executed contract so they can start the mortgage process. You’ll need to submit extensive paperwork and pay for certain services related to your new home in order to secure the loan, even if you’ve been pre-approved. Your real estate agent or attorney can help serve as an intermediary between you and your lender.

Property inspections help expose defects in the home that could influence your decision to purchase it at the price outlined in the executed contract. A standard home inspection is most common, but other types of inspections (radon, pest, septic, structural, HVAC, mold and others) are available. If a defect is found, your real estate agent or attorney may advocate that the seller cover the cost of repairs or reduce the home’s sale price, or you may wish to cancel the contract.

Your contract will usually require the seller to deliver evidence of title. In addition, your mortgage lender will require a title company to review the title history of the seller’s home to ensure they will have a valid, enforceable lien on the property after closing. You can also purchase a homeowner’s title insurance policy that protects you from covered title defects arising prior to or concurrently with your purchase of the seller’s home.

The closing typically occurs at the title company and takes about an hour. A few days before closing, you should check with your title agent to determine what items are needed for closing. At a minimum, you should bring your driver’s license and certified funds to closing. Once you’ve signed all documentation, your lender has funded your loan and the documents have been recorded at the county recorder’s office, you’ll get the keys to your new home!