What you can expect to happen during the closing process.
You searched and searched and finally, you found the perfect home. You make an offer and cross your fingers. Not long after, the seller accepts your offer and it’s official–not quite!
Worried? Don’t be. Allow us to explain.
What is the closing process?
The “closing process” begins when the home’s seller accepts your offer to purchase. The period between then and the actual closing date typically lasts between 30 to 60 days, during which the sale/ purchase of your home is “pending”.
You can think of closing day as the finish line. It’s the day you sign all the closing documents and forms. It’s the day you finalize all the loan paperwork and sign the new deed. It’s the day the home officially becomes yours! (well in NC you have to wait for the deed to be recorded … )
A general timeline of the closing process.
Your real estate agent is there to guide you through the process, but it can still be a bit confusing–full of forms, agreements, walk-throughs, payments, title clearances, and not to mention, enough signature lines to make your hand cramp up for days.
So we put together a general timeline of the closing process. Here’s what you can expect to happen during the closing process, step-by-step.
Step one: Purchase offer accepted
The signing of a purchase agreement kicks off the closing process!
In NC we have two deposits buyer’s pay. If you close, both are credited to you.
The first is Due Diligence and it goes directly to the seller and is almost always Non-Refundable.
The second is Earnest Money and is placed in “escrow” to be held until Closing. If you have to terminate during the Due Diligence Period, you will still get your Earnest Money back.
The purchase agreement can usually be amended for negotiated contingencies or changes, but all involved parties begin the closing process under the assumption that the purchase agreement is final.
Step two: Order a home inspection
Work with your Realtor® to schedule a home inspection with a professional and licensed inspector soon after the purchase is accepted. The inspector will look for any damage to the house, or repairs needed; this can include structural problems or local building code violations.
In NC and SC, homes are sold “as-is” and sellers are not required to make repairs in order to sell. Be sure to do this early enough to ensure the seller has enough time to fix any issues.
Step three: Loan origination and underwriting
Work with your Realtor® to send your accepted purchase offer to your lender so they can begin originating and underwriting your loan. You should have already filled out a mortgage application, provide proof of income and assets, and receive a rate lock and loan estimate.
They will review your file and send it to Underwriting for loan approval.
Step four: Lender appraisal
An appraisal is commissioned by the Lender at some point during the underwriting process. If the appraisal comes in lower than what you are paying for the house, the lender will only agree to finance the amount of the appraised value. In many cases, a low appraisal will require you and seller to renegotiate the purchase price and purchase agreement.
*The appraisal fee is usually paid either on or before the appraisal date.
Step five: Obtain a homeowners title and insurance
Most lenders require buyers to provide proof of homeowners insurance prior to closing. Start looking for homeowners insurance early in the closing process.
The Closing Attorney will work to get Title Insurance for the Lender, but it is also a good idea to get a buyer’s title insurance policy, which will cover the cost of addressing any issues with the property’s title that may arise in the future.
Step six: Loan approval
Loan approvals usually come through towards the end of the closing process. The loan approval is the last big step before closing. This is also known as the “Clear To Close” and means all figures are set and documents are in and that the loan is set to be funded and closing can move forward.
Step seven: Closing notice and closing disclosure
Your Realtor® and escrow agent will send you a formal closing notice with the time, date, participating real estate agents and location of the closing.
The Realtor's® notice should include information on utilities and the location of the closing. The escrow agent’s/attorney’s notice will tell you what you need to bring to the closing, usually including both buyers, and photo IDs. It should also involve wiring information, HOWEVER, clients should ALWAYS CALL to verify the account number before approving.
The Closing Disclosure will provide a final list of closing costs and funding needed for your deposit. The closing disclosure should arrive within three business days before the closing date.
Step eight: The final walk-through
Buyers are usually allowed a walk-through of the house 24 hours before closing. Make sure the previous owner has vacated, and that the house is in the condition agreed upon in the contract; typically this is defined as “broom swept” clean. If there were any issues with the house found upon inspection that the owner agreed to fix, make sure those repairs were made.
Closing day is here! You’ve completed all of the steps leading up to this day, and you’re ready to officially become the owner of your new house. Don’t forget to bring any of the required documents listed in your closing notice or your down payment to the closing.
Oh and one more thing, Congratulations! You made it through the closing process! You’re a homeowner and we know you’re going to love it.