Closing is the last step to completing the process of buying a house. In actuality, there are several steps to closing and the entire process could take several days. While making an offer and having it accepted can feel like most of the work is already done, the most important steps from a legal and financial standpoint have yet to occur.
To help you break down the process and navigate it with as few surprises as possible, here are the steps you must take following an accepted offer:
1. Find a Title Company
In Texas, title companies will usually be the ones to handle much of the heavy lifting when it comes to the closing process. They will handle funds on your behalf and verify any contract documents pertaining to the sale.
Once you and the seller have selected a title company, the seller will deliver the final sales contract to them. You will have a chance to review the final documents before you sign them later on, but it is always a good idea to look them over or have a real estate lawyer examine them in order to spot any potential problems or avoid any setbacks early on.
Many transactions will require “earnest money” that acts as a security deposit at this point to show the seller good faith that they can remove the listing from the market without major consequences.
At this point, the title company will perform a title search to verify that the property has an accurate survey and a clean title with no liens. This process takes around a week. You can also request title insurance to protect you in the event of any problems such as an undisclosed claim to the property.
2. Finalize the Details of Your Loan Agreement
Nearly all home buyers will have already gotten a pre-approval from a mortgage lender and begun the true process of getting approved for a loan well before they made an offer. Once the final details of the sales contract have been drafted, the lender can begin processing the buyer’s account information and the loan agreement contract based on the final sales price.
3. Obtain an Inspection
Your offer should have contained a contingency that the sale status or the final sales price could change based on the outcome of a home inspection. Find a reputable home inspector to examine the home and property from top to bottom. They will be looking for things such as:
● Structural integrity
● Undisclosed wear
● Faulty components, i.e. leaky roof
● Water damage
● Mold growth
● System issues such as problematic insulation, wiring, plumbing, etc.
● Integrity of heating, cooling, hot water systems
● Anything else that could decrease the value or use of the home
A separate termite inspection is often needed to check for wood-eating pests that can easily destroy a house from the inside out.
Any issues discovered can give the buyer grounds to demand repairs, renegotiate the price or walk away from the sale. The buyer should walk through the home again once all repairs are complete to ensure that work has been performed according to an agreement.
4. Lender Appraisal
Your lender will want the property appraised to ensure that they are financing an asset worth exactly or close to the agreed upon amount. An appraiser will assess the property based on recent sales data of comparable properties and other market factors.
A low appraisal could see you losing financing for a portion of the house, so make sure you try to renegotiate the closing price based on how much you can afford to finance.
5. Title Details Are Finalized
Once the title search is complete, the title commitment can be arranged. This document officially exchanges the title following a successful closing.
The buyer will have the opportunity to review the title commitment to see the results of the title search, the survey data and anything the title company discovered. Schedule B of the document will reveal particular areas of concern such as easements or title insurance coverage exclusions. The buyer will have a limited amount of time to either accept or reject the terms of the title commitment and set an official closing date.
6. Closing Day
At the agreed upon time and place, the buyer, seller, a notary and any relevant agents will all sit down to officially finalize the transferal of ownership. The buyer will be presented a rather large 50-100 page packet containing the final details of the sales contract and the loan agreement for them to sign. Funds will be deposited to a third party such as through an escrow account or the title company itself. The buyer will then “take title” of the property either immediately or at an agreed upon date.
At this point, the buyer officially owns the house and the process of buying a house is complete! Congratulations!
To further discuss the closing process with one of our buying & selling experts, or to utilize the knowledge, resources & experience of a nationally accredited team, give us a call today at (972) 992-1471 or fill out the form on the right!