The Home Closing Process: 6 Steps to Closing on a House

After you’ve done the hard part of selecting just the right house, it’s time to get the legal documentation done, sign the papers, and get the keys in your eager hands. Know that it doesn’t have to be stressful. When you partner with the right professionals, your real estate closing can be smooth, convenient, and efficient. 

Understanding the steps to closing on a house will help you prepare and give you the confidence you need that everything will be taken care of in a legal, professional, and timely manner. At Bay National Title Company, we are here for you. 

Here are the 6 steps of the house closing process:

 

1. Choose a Closing Agent

The professionals you rely on for the home buying process should be carefully chosen. They need to be experienced, provide clarity in communications in keeping you informed of the actions being taken, and have a proven track record of completing closings in the right order and on time. Title companies are a popular choice for homebuyers to select because they typically work with many types of properties and offer the necessary services to make sure all the bases are covered for a legal and successful closing. 

 

2. Construct the Escrow Agreement

The escrow agreement is a core part of the real estate closing. The escrow agreement represents the facilitation of the actual transaction for the sale of the home and manages the transaction of funds, documents, and actions. The closing agent will handle the transaction and place the funds for the sale of the home in the escrow account and hold it there as a designated third party until the final day of closing.  

 

3. Conduct a Title Search

A title search should be performed by experts to ensure that it is “clear” of any issues that would affect the sale. The types of problems that could be uncovered by a thorough title search include:

• A title examination actually protects against:
• Conflicts in the legal description
• Missing heirs who never conveyed
• Unpaid taxes
• Unreleased mortgages
• Claims filed of record by others claiming to hold an interest in property
• Unpaid contractor /materialmen liens
• Defective foreclosure deeds

 

The title search is conducted to protect your legal and financial interests. If this is not performed, a major issue could spring up later (even up to years later) after you move in — and could potentially be a financial disaster (without title insurance). If and when something is uncovered during the title search, it can be addressed efficiently during the house closing process.

 

4. Get Title Insurance

Another crucial part of the home buying process is getting title insurance, which will cover you for the entire time you own the property. For example, if five years after you move into your home, a previously unknown heir contacts you, and this is part of the stipulations in the title insurance agreement, the title insurance covers associated costs.

Did you know there are two types of title insurance? One type is called the lender (loan) policy to protect the lender in the financial transaction, and the other is the owner’s policy that protects you. The policies are customized to your particular needs. A big difference between other types of insurance like homeowner’s or health insurance is that you only have to pay for the title insurance one time at closing. 

The typical cost for title insurance is around $1,000, but it can range up or down depending on the purchase/loan price. Often, the buyer will be responsible for the costs of both the lender’s and the owner’s policies, but it is not uncommon for some of those costs to be negotiated with the seller. 

Since title problems occur in Florida, as well as the rest of the country, working with the closing agent on title insurance will give you the peace of mind and financial confidence you need to feel confident in making one of the most important purchases you will make in your lifetime. 

 

 

5. Acquire a Closing Disclosure

At this step in the house closing process, you are almost ready for the closing day. But before that happens, you have to acquire a closing disclosure, which is a multi-page form that shows the final details of the mortgage loan involved in the home purchase. The form includes what the projected amount of your monthly payments will be and any other fees or costs associated with obtaining the mortgage from the lender. This should be provided to you at least three days prior to closing to give you time to review it. The closing agent will often be the one that provides you with the form. 

If your mortgage company makes significant changes in the condition of the loan after you receive the closing disclosure, they must provide you with an additional three business days prior to the closing day to review the new parameters. Significant changes may include a prepayment penalty, a change in the APR greater than 1/8 of a percent, or other loan stipulations.

 

6. Prepare for Closing

A final date, time, and location will be set for the big day. All of the legal documentation should be completed prior to everyone “coming to the table.” If there is any additional information needed from you, your closing agent will contact you and let you know before closing day. A good closing agent is efficient, professional, will answer any questions you may have, and will keep in communication with you to make sure you are ready. They take care of all of the behind the scenes work while you pack and eagerly await to move into your new home.

 

Contact Bay National Title Company for a Better Closing Experience

At Bay National Title Company, we work closely with you on each of the steps to closing on a house. Managing a truly streamlined process that is both thorough and timely, we are experts in real estate closings — from escrows to title searches and title insurance to closing day. 

Contact us today for a better closing experience.  We provide an unparalleled experience —helping people in Florida and across the United States with the home buying process.