When buying a home, you must be able to navigate the closing process, which though apparently complex, consists of a series of steps that must be followed in the right order.
Here are a few important tips to help you navigate the home closing process.
Start with an Escrow Account
The first step to navigate the closing process is to open an escrow account, which is managed by a third party on behalf of the buyer or seller. It’s essential to open an escrow account when you make an offer to buy a home.
In some cases, you may open an escrow account with the title company that holds your “earnest” money until the sale closes. Earnest money is like a deposit paid to the seller to show them you’re serious about buying the home. It’s usually a good idea to plan the earnest money to be 1 or 2 percent of the purchase price.
Get Title Insurance Coverage
The next step in closing the deal is to purchase title insurance before the closing date. Your title company will check to ensure the property you are purchasing has no liens or multiple mortgages on it. The title will be cleared once the investigation shows the property is free of third party claims. The title company will offer you title insurance as a home buyer, which protects you from any legal issues involving the transfer of ownership. Title insurance usually costs around $2,000 as a one-time fee.
Homebuyers should either get pre-approved for a mortgage or apply for one when it’s time to make an offer. The mortgage loan approval process may take up to a few weeks or more. It’s advantageous to apply for a loan before selecting the home you want to buy. Getting pre-approved is a signal to the seller you are serious about buying a home, thus enabling easier navigation of the closing process.
Plan for a Home Inspection
Never pass up the home inspection because it’s a crucial part of the process that confirms the condition of your new home. Even though it costs a few hundred dollars, it’s worth conducting a thorough inspection to demystify any concerns you have about future home improvements. It will give you a clear indication if you have problems such as termites eating away at your new home. Make sure to be present with the inspector during the inspection, and don’t hesitate to ask relevant questions.
The final steps to the home closing process involve depositing additional funds in your escrow account and signing a stack of papers. Your lender may ask you to open an additional escrow account for a specific time frame. You’ll make prorated property tax payments and pay a full year’s homeowners insurance premiums into this account.
Before signing all the paperwork, take one final walkthrough of the property to be sure of your selection. Then sign the papers either at your title company or attorney’s office. You may need others, such as a notary, agent, and lender, to be present while you sign. Make sure you understand the terms of the closing disclosure form.
Navigating the closing process takes time, patience, and advice from experienced professionals. Follow these tips to ensure a smooth closing process. For assistance with buying or selling a property, contact the experts at Brighton Escrow. Serving the Hermosa Beach area, we are ready to offer you top-tier escrow services.