You and the other party negotiated a purchase price and closing costs on a house, but now you are wondering about the next steps. Whether you are a buyer or seller, you will need to follow the house closing process to finalize the sale.
Purchasing terms can change during the going through the home-closing steps. You could end up calculating closing costs again if something pops up during the inspection or appraisal. Check out the home-closing process and what you should prepare for in each step.
In addition to the seller and buyer, several people participate in the home-closing process. The real estate agents and legal representatives communicate with the closing agents of the title company, title insurance, and lender.
Each entity reviews and works with a portion of the closing documents, so it is important for both the seller and buyer to keep vital documents on hand. The first document both parties need is the purchase acceptance agreement.
The purchase acceptance agreement details the offer, any contingencies, and the agreed closing date. Both parties will need to complete their steps by the date or risk breaking the contract. It takes between 30 and 45 days to close a property, on average.
The seller may set a time limit to secure financing. Holding onto a non-occupied home can be expensive, especially if the seller pays a second mortgage for their primary residence.
As the buyer:
- You may need to leave a “good faith” payment in an escrow account. This earnest money goes towards the purchase and fees on the closing day while you secure financing.
- You will need to apply for a home loan immediately. Ideally, you would have applied for pre-approval from your chosen lender prior to signing the purchase agreement.
- You will need to complete the loan application and submit any related documents. The application will ask about the loan amount, which can be the purchase price or another amount. For instance, your loan may include additional funds for renovations.
- You should keep the documents you will need to show the lender in one place. Underwriting a mortgage takes weeks, and agents will need to comb through your income, assets, debts, and other financial information.
As the seller:
- You are preparing to transfer ownership and the property to the buyer. You will need to make repairs or finish tasks stated on the purchase agreement.
- Review the conditions and deadlines of the sale. You may have to complete multiple tasks by specific times to finalize the sale.
- You may need to look at the closing disclosures timeline over the next four to six weeks it takes to close on the property. So, keep your paperwork in one place, like in a large envelope.
Find out what the seller and buyer need to do between signing the purchase agreement and closing day.