The Closing Process 101

Closing is the last step in the home buying or selling process. Your realtor should help the process go smoothly, but it’s important to stay organized throughout.

It’s also essential to be aware of contingencies, which would allow a buyer to renege on a deal if promises aren’t met following the home inspection. In all, you can expect the process to take between 40 and 50 days.

Earnest Money

The first part of closing is earnest money, aka a “Good Faith Deposit.” This is when the buyer pays a very small percentage of the home’s cost to a title or escrow company. If they pull out of the deal for reasons that are not named in the contingencies, they lose that money.

Home Inspection

The next step is the home inspection. A professional inspector will examine the house and create a summary of its condition and any large concerns. This will give you all the information you need to finish the sale.

Home Appraisal

Next is the appraisal. This is applicable for those taking out a mortgage. In this step, the lender will come to the home to appraise it and assess if the agreed-upon price is fair.

Title and Financing

In this step, the title and financing are assessed. The title is checked to make sure there aren’t any liens or any other complications. The buyer also ensures that they can take out the mortgage they intended to.

Title Insurance

This step comes into play for those who are interested in protecting against losses in the event that a problem arises with the title after the home is purchased. For most home purchases, there are two parties that require title insurance- the lender and the homebuyer.

The Final Walk-Through

The purpose of the final walk-through is to assess the condition of the home, if all promised repairs were executed, and if all parts of the home that were purported to be included in the sale are still in the house.

Closing Costs

The last thing to do is to take care of closing costs. This includes any charge associated with the above steps, as well as the agents’ commissions.

Source: Redfin

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