The first home is a huge milestone but most will say even if it is your 10th home there is always a laundry list of items to get lost amongst. What you really need is a real estate closing checklist.
Having the exact things sorted out weeks before the keys are handed off, right up until the very day before is what you need. All of these items are detailed out here for you so that you can be assured this transition will be stress-free.
A calm transition is ahead leaving you time and saving your energy to focus on your family and how much you are going to love your new home.
The Real Estate Closing Checklist
The offer has been made and accepted, now it is time to get really serious. Paperwork is coming and the next few weeks are going to get really busy.
Just as a real estate agent will aid you in the process of buying, an attorney will aid you in the back end administrative procedures
Moving forward into the process finding an attorney will make every aspect far less stressful and much more streamlined. Obtaining an attorney as quickly as possible will allow you legal advice and someone to cut through the unreadable language.
They will be able to draw up a contract to ensure that you will keep the home you are dreaming of.
Now yourself and the buyer have agreed on a price and are committed to the terms of sale. This is where the administrative work truly begins, paperwork, inspection, money changing hands.
A show of good faith will be deposited into a holding account, generally, between 5 and 10% of the purchase price, the percentage often fluctuates depending on the market. The amount will eventually be put towards the down payment on the home.
Once this process is complete, you can review the contract with your lawyer and get to signing with the seller and move forward with the next step.
The inspection happens fairly early in the process and this provides you with a report of the condition good or bad of the house and its mechanicals. This is a step that can not be overlooked as you will immediately learn a great deal about the home and any issues it might have. It's also reassuring to know what is in great condition in the home.
Measurements and detailed notes should be taken as well as photography. This is your opportunity to get as much evidence to have for your records.
The common cost for an inspection report is between 300 and 500 dollars. After the report is filed a copy is provided to both the buyer and real estate agent. From there, any proper repairs can be discussed and recorded.
Obtaining a title, is the process of establishing legal ownership. There are several variations on this procedure although no matter what version is selected it is essential that this is established immediately.
With a title in place there can be no conflict of ownership or in what fashion ownership has been established.
There are five ways to "take title";
- Sole and Separate
- Community Property
- Community Property with Right of Survivorship
- Joint Tenancy With Right of Survivorship
- Tenants In Common
A review of the situation is generally done with a real estate agent and possibly an attorney to establish which title would serve the individual situation best.
Purchase the appropriate homeowner's insurance policy. This should be addressed approximately two weeks before the closing date. The firm needs to provide your lender with a package of information 10 days before the closing.
This will lead to delays in the closing if proper documentation is not provided by the scheduled date(s).
Closing Day Checklist
It is finally here, you made it through the administrative marathon and piles of paperwork to arrive at the final closing on the home. The last few details you need to keep in mind are essential. If you are working with a professional real estate agent, they will make sure that you have all of the required paperwork. Many of the documents are digital and have probably been sent via email to the title agency.
- Bring ID: This may seem like common sense but you must have official identification to show your identity. Government ID or current passport are best examples.
- Insurance Paperwork: This is more of a covering all of your bases item. There is a good chance that the agent has already obtained this documentation. However, in case they have not and/or to make the process further official it is always wise to have your own paperwork.
- Home Inspection Reports
- Check for Fees and Down Payment: These can be certified or cashier's check and will cover your downpayment and closing costs as needed. Per federal regulations, you will be given the exact amount required a day before meeting to ensure proper payment.
- If a wire transfer is chosen as payment the process should be initiated on an earlier schedule as to avoid any potential bank problems that may delay the closing timeline. You will be provided with specific wire transfer instructions by your real estate agent.
A Final Inspection
It should be noted that this includes not only the condition of the building and any repairs that were noted in the initial inspection but also all items listed in the original purchase agreement when you made your original offer.
Important points to assure that you note when doing the final walkthrough are as follow;
- Bathroom Condition
- A wet humid environment is a breeding ground for mold and water damage. Even if you had not noticed these things when you initially inspected make sure to look, they can develop very quickly
- Assure all plumbing is functional
- Electrical Systems
- Make sure that there is no damage to plate covers and switches.
- Test outlets with something as simple as a phone charger
- The same goes for mold in the kitchen
- Appliances should be tested.
- Windows and Doors
- All doors and windows should be completely intact
- All latches, locks, and hinges completely functional
- Property and Landscaping
- Assure that the outdoor matches the description
- Any systems that should be are functional (ex. irrigation, fencing)
Just before the closing day, a five paged document will be sent to you. The closing disclosure is a further detailed copy of the original loan agreement you signed. It will be detailing the final terms and costs.
This should be reviewed, both, when you receive the document as well as on the day of closing.
The additional fees that are being paid, closing costs, for example, are also outlined in this document. You should always compare this final copy to the original agreement and speak with your agent if there are any questions or concerns.
Mortgage Promissory Note
The first of the documents to be addressed is your agreement to repay the loan. The terms listed within being;
- Amount owed
- Interest rate
- Payment period
Amongst these key details also included are items such as location to provide payment to and what entity will take over if the loan defaults. It is very clear why it is incredibly important that you understand all aspects of this initial document
The Mortgage (Deed of Trust)
If you hear someone mention their mortgage this is what they are technically talking about.
When you look over the details of each of the documents, the promissory note is what binds you to repayment whereas this document is what allows legal right to the lender to take ownership of the home.
It is what provides the right of foreclosure in case of default.
Another instance of two items being similar, this deed (lacking the of trust) refers to the document signed to pass ownership. Once this document is signed the property now exists in the buyers' name.
Initial Escrow Disclosure
This statement illustrates specific fees and charges that are paid into a designated escrow account each month. The initial amounts and details of the payments should be discussed and written up in the original mortgage agreement
Funds in the escrow account are primarily utilized for payment of property taxes.
Of the documents on the list, this is one that may not apply to every closing. It varies from case to case depending on the real estate laws in the area you live in.
The only time that this document will need to be filed is if real estate law states that there is a property transfer tax in your state or your county. If that is not the case then you do not have to file said document.
Sitting Proud In A New Home
An organized approach to the real estate process will save a great deal of stress for the first time and veteran buyers alike. But as you have read, when armed with a real estate closing checklist like this there will be no concern.
Still starting the process or know someone that needs help? Utilize our home finding app to search and locate homes in your area today! You can even take a virtual tour of the home before ever going in person.