You've gone through the real estate process thoroughly. You did your homework, researched all the neighborhoods and areas that fit your lifestyle. You've gone to all the open houses in Boulder, finally found the perfect home and price-crunched to ensure you could actually afford it. You've made an offer on the house of your dreams. Maybe the seller even countered it. In the end, you both agreed to a price and terms with which both parties were comfortable. Now what?
What's Involved in the Closing Process?
Welcome to the closing on your new home. This is the day when the new buyer and the home's previous owner finish the property's legal transfer. Once this process has been completed, the buyer receives the keys to his or her new home.
Proving You Have Homeowners Insurance
This sounds simple, right? In reality, there are several key things that need to take place to ensure a proper closing. The buyer needs to prove to their mortgage lender that they purchased insurance on the property by presenting a homeowner's insurance receipt.
Pay Closing Costs and Sign Off On the Final Cost
The buyer and seller also have to sign paperwork showing that the price listed on the contract is what they agreed on, as well. In addition, closing costs need to be paid to the closing agent by the buyer, seller or both, depending on what was agreed upon. After this, all other relevant documents must be reviewed by both buyer and seller.
Establishment of the Escrow Account
In addition to paperwork, an escrow account must be established. The closing agent does this in order for the buyer to cover things like property tax, homeowner's insurance, PMI, and interest that accrues in the interim. The buyer must then sign all documents associated with the mortgage on the property and execute them by signing. At this point, the lender can present the closing agent with a check that will cover the agreed upon mortgage amount to purchase the home.
Undergoing the Final Walkthrough
The final walkthrough is done with your real estate agent to make sure the home you are buying is in the condition you have agreed to. If you negotiated for certain repairs, for example, you want to make sure these repairs are done. You will want to check that the seller has left behind any appliances they agreed to leave, and that they didn't take anything they shouldn't have such as hardwired lighting. Flush all toilets to make sure they work and run the water in each sink, checking below for leaks. Try the garage door opener, and turn on the air conditioner and heating system to make sure they all work. Make sure that there are no changes to the home since the first inspection, except for repairs that have been negotiated. Take your time on the final walkthrough so that you know exactly what you are getting for your new home. Look in storage areas to make sure there isn't any trash left behind. If a problem has been identified, your real estate agent can discuss these issues with the seller's agent and come up with a solution.
Receive the Keys and Title to the Property
Lastly, the buyer receives keys to the property, as well as its title. The title and sometimes other legal documents must be recorded so there is a public record of the buyer's new interest in the property. If property isn't properly recorded, it opens the buyer up to other peoples' claims that they own the property. In some instances, a shifty seller sold the property to two separate people. Depending on the state in which you live, in some instances, the person who records their title first is considered the true owner. Recording is the final step in the closing process and, once complete, the house fully belongs to the new buyer.
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