Closing on your first home is an exciting and nerve-wracking experience. Saving and working towards buying your first home can feel like a new chapter in life. You’ve worked so hard for this moment, and it can feel gratifying. However, it is also the most significant purchase that people make in their lives. Taking on a large loan and the responsibility of home ownership can feel scary. Ease your stress by reviewing what to expect at the closing.
Funding Your Escrow Account
An escrow account will be opened for the transaction before the closing. An independent third party manages this account. They will hold the money in an account while the real estate transaction occurs. That way, neither party takes on unnecessary risk. The buyer will have funds deposited for the property taxes and insurance.
Final Walkthrough
At some point before the closing, you will be allowed to do a final walkthrough. Your real estate agent may offer to do this for you. However, you are the one signing the contract. Attend the final walkthrough to confirm that the house is in the condition you expect it to be in. While everyone hopes the home will be as you expect, this doesn’t always happen. The sellers could take elements that you expected to remain. Or they could have caused new damage. Perhaps they were supposed to have work done and didn’t. You need to know these issues to ensure they get addressed before the closing.
Closing Disclosure
At least three days before your closing date, you should receive a closing disclosure document. Read it carefully and in its entirety. These documents will include the details of your loan terms, monthly payments, and closing costs. You need to make sure all of this information is recorded correctly.
Property Insurance
If you pay cash for your first home, you are not required to have property insurance for the closing to take place. However, most people do not have the funds to buy their first home with cash. In contrast, they must secure a loan called a mortgage. The lender will require the buyer has property insurance in place to secure the property, as it is the collateral for the loan.
Sign Documents
Many people focus on the document signing phase. This is when the seller and buyer sit down and sign all of the necessary documents. There are many documents, so plan to sit down for a while. While the documents can vary based on the type of property you are buying and the financing you are using, these are the common document categories:
- Legal documents
- Deed
- Mortgage agreement
- Closing disclosure
- Insurance policy documents
- Title related documents
- Bill of sale
- Escrow statement and disclosure
- Tax declarations
Closing Costs
The closing costs are the monies the buyer is expected to pay when closing. In Florida, the buyer and seller pay a portion of the closing costs. Who pays for each specific closing cost is negotiable. The seller and buyer can use their bargaining power to determine which costs they are responsible for.
- Title insurance
- Recording fees
- Real estate appraisal
- Credit report costs
- Loan origination fees
- Home inspection
- Attorney fees
- Property taxes
- Application fee
Recording of Deed
The deed is the legal document that transfers ownership. After signing it during the closing on your first home, you need to have it recorded in the country where your home is located. Ownership isn’t officially transferred until you record the deed. The recording makes it a public record and officially puts the world on notice that ownership changed.
Receiving Keys
One of the most exciting steps of the closing process is receiving the keys. This step happens after everything is signed and the funds are distributed. The seller gives up their keys, as they no longer own the property. The buyers receive the keys as they are the new owners.
Prepare for Closing on Your First Home
Knowing what to expect when closing on your first home makes you feel more confident about your home-buying experience. Real estate transactions are different, so working with an experienced real estate attorney can give you much-needed guidance. They have seen many transactions and can help you navigate your first real estate purchase. They can advocate on your behalf, review documents, and provide legal advice.
Schedule a consultation and prepare for closing on your first home.
