What Homebuyers Should Expect During Closing

what homebuyers should expect during closing

You’ve done it – you’ve bought a home. Congratulations! You are *almost* an official homeowner. But before you get too excited, check out these steps of what homebuyers should expect during closing.

Choose a Closing Agent

Typically when you work with a real estate agent, he or she will work with a closing agent to place the order as soon as the offer/sales contract is accepted. What is a closing agent? They’re typically a title company, an escrow company, or a settlement company such as Madison Settlement Services.

A closing agent oversees the entire closing process and ensures a smooth process without delays or issues. If you would like to pick your own closing agent, you are free to do so. But most of the time, homebuyers simply let their real estate agent decide on what closing agent to go with.

Create an Escrow Agreement

Second on the list of what homebuyers should expect during closing is to create an escrow agreement. Also known as a contract, an escrow agreement is reviewed by the closing agent for accuracy and completeness. It is also the responsibility of the closing agent to put your down payment (deposit) into an escrow account. These funds will remain in that escrow account until closing!

Title Search is Performed

Some title issues such as liens against the property or even utility easements could be happening to the home you’re purchasing, and you would have no idea about it! Therefore, a title search is performed by a title company.

If there is an issue found, title professionals will take care of the problem without you having to even lift a finger. Now, once the title search has been completed, the title company that conducted the search will then provide a title insurance policy which will come in handy as seen in the next step.

Purchase Title Insurance

what homebuyers should expect during closingNext up in the steps of what homebuyers should expect during closing is purchasing title insurance. There are two types of title insurance coverage.

The first is a Lender’s policy, meaning that the lender is covered for the mortgage loan. The second is an Owner’s policy which protects the homebuyer in the amount of the home’s purchase price.

We highly recommend purchasing an Owner’s policy as it will protect your largest investment – your home. Meanwhile, if you’re planning on obtaining a loan, the bank or the lender usually requires that you purchase a Lender’s policy even though this type of title insurance policy covers the lender.

Acquire a Closing Disclosure from Lender

The lender must provide you with a Closing Disclosure before closing. When you or your lender make any significant updates/changes to the disclosure, you, as the homebuyer must be provided with a new form and an additional three (business) day waiting period for the most recent form. What does this mean? It’s applied if the creditor:

  1. Makes any changes to the APR that’s above 1/8 of a percent for loans
  2. Changes the loan product
  3. Adds a prepayment penalty to the loan

A revised Closing Disclosure will be provided at or before closing if the changes are not significant.

The Final Countdown: Prepping for Closing

At this point in your ‘what homebuyers should expect during closing’ experience, you should be in the final countdown to closing. As soon as the closing agent confirms with both the lender and the seller, a final date, time, and location will be set for closing. Yay! This means that on closing day, the hard work is behind you and you can rest assured that all paperwork is in order and it’s finally time to start this new adventure in your life!

Our best advice? Choose an experienced closing agent who will make sure that all the behind-the-scenes work gets done properly once the seller accepts your offer. This will 100% make the entire closing experience run smoothly and properly.