Becoming a new homeowner is one of the most exciting moments in your life. As exciting as it is, you can make it plenty more exciting if you go about it the right way. A home purchase will always be a process, and you’ll need to exercise some patience to get through it. Still, taking the right steps for closing on a house from the start can help expedite that process and save you some money along the way.
If you already have a preapproval letter from a lender, sellers know you’re serious. When you narrow your search and are close to buying, start thinking about making the deal close as soon as possible. You’ll want to prepare for what’s coming to get into your new home as quickly as possible. Here’s how to grease the wheels of the closing process.
The most important steps for closing on a house
Some states have different requirements, so look into your state’s rules before closing on a property. Whether required in your state or not, here are the general steps for closing on a house. Come into the process prepared to make your closing go smoothly.
- Escrow account– An escrow account ensures a secure transaction. A third party handles the money, so the seller knows funds are available, and the buyer can go through a proper process before he approves the purchase.
- Title search– This is a search conducted to find any claims on the property, such as liens. The title search is essential to ensure that nobody can make a claim against your new home after you have completed the purchase.
- Attorney – A real estate attorney can be valuable to you in pointing out any problems or suspicious wording in the paperwork. Some states require hiring an attorney as one of the steps for closing on a house.
- Negotiate costs– Each of the steps in closing on a home comes with its own costs. These costs add up to extra expenses that can take buyers by surprise. You can save some money here if you ask questions and stand your ground. Getting rid of junk fees from lenders, having the seller pay for repairs, costs of pest inspections, and pest control: these are all on the table for negotiation.
- Inspections– You’ll want the home inspected for any necessary repairs before you move in. Many lenders also require a review for pests such as termites that can damage the property’s foundation and treatment if they are present. Not only is this important to make your new home livable, but it will also let you know the costs associated with getting it to that standard.
- Lock interest rate– Interest rates fluctuate, and with a purchase this large, even the smallest change can make a big difference in your monthly payments and long-term costs. If you can, you may want to get your interest rate locked-in for the loan ahead of time.
- Contingencies – You must remove contingencies by a date stated in the offer to carry out the sale. Be aware of whether your contingencies have a passive approval, which means they are considered approved if not contested by that date. Keep your rights to challenge intact to maintain leverage in the purchase.
- Meet funding – You’ll need to find additional funding to cover the cost of the house. You likely already deposited earnest money into the escrow account. Usually, the earnest money will contribute to the down payment. All cost negotiations must occur before this point because if the deal falls through now, your earnest money could go to the seller as compensation.
- Final walk-through – Make sure all agreed-upon repairs are complete, and nothing new has arisen. Be confident when you purchase a home that everything is as you agreed to in the contract.
Congratulations, you are ready to become a homeowner. Be patient, and get into a home you love. Don’t let real estate agents or sellers rush you through any part of these steps for closing on a house. Ensure you do everything correctly to save yourself headaches and money. There is no point in getting into a home if you pay more than it is worth.
What has persuaded you to buy a house over renting?