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Larson AFS Corp.
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A real estate closing, often referred to as a settlement, is a crucial and detailed process that marks the official transfer of ownership of a home from the seller to the buyer. The length of time required for a closing can vary widely depending on various factors, but it typically involves two main components: the mortgage portion and the title closing.
During the mortgage portion, the buyer engages in a series of important steps, which include filling out and submitting all required documentation to the mortgage lender. This paperwork is integral to securing financing and may involve financial disclosures, loan applications, and verification of income.
The title closing, in contrast, is a significant event where the seller formally signs the deed that transfers ownership of the property. This carefully executed process includes handing over the deed to the buyer, thereby officially finalizing the transition of ownership. Together, these steps ensure that both parties meet their legal obligations, paving the way for a smooth exchange and new beginnings in the home.
The list of people who attend a closing isn’t lengthy, but likely includes more people than you’d imagine. Different states have different requirements, but generally a representative of the lender, a title agent, the buyer, the seller, and attorneys can all be expected. Some states will allow different entities to handle the closing procedure, so check with local policy to know what to expect in your area.
The first step to closing on a house involves opening an escrow account that will be held by a third party, such as a bank or your title or escrow agent. This neutral party account holds on to money involved with the sale, such as any required deposits or earnest money.
You should hire a qualified third-party inspector to conduct a walkthrough of the home and carefully inspect everything, inside and out. A separate inspection for pests is also necessary. Inspections are important because your mortgage lender may require one to process your loan.
At Larson AFS Corp., we prioritize our buyers by going above and beyond to ensure a smooth experience. We make certain that all necessary permits are obtained, prevent our clients from purchasing properties that have been superficially renovated (often referred to as “lipstick flips”), and provide any information they need to make informed decisions. Additionally, if a pest inspection uncovers an infestation or even a minor issue with termites or other pests, it must be addressed before the mortgage company allows the closing to proceed.
If you do detect any issues with the home you’re looking to purchase, you have the option to renegotiate the price — that is, as long as you haven’t accepted a purchase contract that states “as is,” which means that the seller isn’t obligated to cover any repair costs or lower the initial price. It doesn’t mean that you can’t ask, of course. If the cost is going to be a highly significant one and the seller won’t budge, you can back out of the contract.
You will need to go through the mortgage application and approval process, which involves submitting reams of paperwork and financial records, so be sure to have recent tax returns, income statements, bank statements, etc. ready to go. Your lender can provide you with a list of necessary documentation so you can get ahead of the game.
Strongly consider getting preapproved by a mortgage lender before you began your home search. It can help speed up the final approval process and can give you a rate lock on your interest rate so you won’t be vulnerable to market changes. You should receive a loan estimate, including your loan terms, estimated closing costs, estimated payments, and any other loan considerations. You should also receive an estimated closing date.
The final step is to sign the papers. It’s good to take your time with this as the agreement can be up to 100 pages in length. Carefully analyzing the fine print will save you a lot of time and worry if something seems amiss down the line.
One key thing to do is to ensure your interest rate is correct and that there’s no penalty for prepayment. If you have concerns about understanding the document, be sure to reach out to an attorney.
Closing on a house seems like a cumbersome task, but the toughest part of it is the waiting. If you take the time to enlist the help of good professionals at every stage of the process and you feel confident that you’ve done your research, you’ll look forward to the day when you get the keys and can cross the threshold to your new home.
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