You found your dream home, and your offer was accepted. Now what? The path from contract to keys is full of details that can trip up even experienced buyers. Skipping details or rushing can cost you time, money, or peace of mind.
This guide shows you exactly what to do at each stage.
Closing Process at a Glance:
|
Phase
|
Key Actions | Timeline / Notes |
|---|---|---|
|
Phase 1: Closing Process (Offer Acceptance to Loan Approval)
|
Deposit earnest money, complete mortgage application, secure homeowners insurance, conduct inspections, prepare for appraisal, review title | 30–60 days |
|
Phase 2: Closing Day Preparation and Execution
|
Schedule final walkthrough, confirm repairs, review Closing Disclosure, prepare funds, attend closing, verify documents, avoid scams | Last few days before closing |
| Phase 3: After Closing (Becoming a Homeowner) | Change locks, transfer utilities, secure legal documents, revisit inspection report, create estate plan, register with city, watch for scams | Immediately after closing and ongoing |
Phase 1: The Closing Process (Offer Acceptance to Final Loan Approval)
The closing process usually takes 30 to 60 days if you have a mortgage. Being organized and proactive makes the process smoother.
Financial and Loan Requirements
- Deposit Earnest Money Early: After your offer is accepted, send your earnest money deposit (1%-3% of the sale price) to the title or escrow company. Backing out for a non-contract reason risks losing this deposit.
- Complete Your Mortgage Application and Avoid Financial Changes: Submit your mortgage application once the offer is accepted. Avoid opening new credit cards, financing cars, or large purchases. Pre-underwritten loans can speed approval.
- Secure Homeowners Insurance: Mortgage lenders require proof of insurance at closing. Add coverage for flooding or fire if needed.
Property Due Diligence
- Conduct Inspections: Hire a professional inspector ($300-$400 or more) to check for structural, electrical, plumbing, pest, or appliance issues. Attend inspections and ask questions.
- Use Inspection Contingencies Strategically: Negotiate repairs, credits, or walk away if issues are major. An inspection contingency protects your earnest money.
- Prepare for the Appraisal: Your lender requires an appraisal to ensure the home is worth the loan amount. If it comes in low, options include requesting a second appraisal, renegotiating, increasing your down payment, or paying the difference.
Title and Ownership Security
- Review the Title Search: A title company or attorney checks the home’s ownership history for debts, liens, or claims.
- Read the Title Report and Secure Insurance: Address any issues immediately. Obtain title insurance to protect against future problems.
Phase 2: Closing Day Preparation and Execution
Final Walkthrough
- Schedule the Walkthrough: Conduct this a few days before closing, after the seller has moved out.
- Confirm Condition and Repairs: Ensure all agreed repairs are done and included appliances remain.
- Be Thorough: Bring your inspection summary and offer letter. Test appliances, HVAC, locks, doors, and windows. Look for new issues.
- Handle Walkthrough Issues: Request fixes, delay closing, or withhold funds if problems arise.
Financial and Documentation Preparation
- Review the Closing Disclosure Early: Check that loan amount, rate, monthly payment, and closing costs match expectations.
- Prepare Closing Funds: Bring a cashier’s check or wire transfer for the down payment and closing costs.
- Know Closing Costs: Typically 2%-5% of the home’s purchase price. Covers title search, appraisal, loan origination, taxes, insurance, and prorated fees.
- Negotiate Costs: Compare service providers, request seller credits, or schedule closing at month-end to reduce prepaid interest.
Closing Ceremony
- Bring Essentials: Government-issued ID, homeowners insurance policy, Closing Disclosure, and payment.
- Take Your Time and Ask Questions: Review every document. Ask your agent or attorney for clarification.
- Ensure Professional Representation: Have your agent or attorney present to answer questions.
Avoiding Mortgage Closing Scams
- Be Vigilant: Scammers target closing funds.
- Verify Instructions: Never follow last-minute email instructions for wire transfers. Confirm with your lender, attorney, or closing agent using known phone numbers.
Phase 3: After Closing (Becoming a Homeowner)
Once the home is yours, immediate and ongoing steps protect your investment.
- Prioritize Safety: Change locks and reset codes for smart locks, doorbells, and security systems.
- Change Utilities and Address: Transfer electricity, gas, water, and sewer. Update banks, credit cards, government agencies, insurance, and employers.
- Secure Key Legal Documents: Store the closing packet safely. Keep copies of the Deed, Mortgage, Promissory Note, Title Insurance, and Closing Disclosure.
- Revisit Inspection Reports for Repairs: Create a checklist of repairs or safety issues that need immediate attention.
- Create an Estate Plan: Set up a Will and Power of Attorney. A Will outlines property distribution. A POA allows a trusted person to handle affairs if you become incapacitated.
- Register with the City: Register as a resident to access services, update voter registration, enroll in schools, and claim homeowner benefits or tax exemptions.
- Watch Out for Scams: Be cautious with requests for money, ownership documents, or personal information. Verify anything unusual with trusted professionals.
Reflection for Homebuyers
A smooth transition from offer acceptance to homeownership depends on organization, preparation, and attention to detail. Handling inspections, appraisals, insurance, and closing documents carefully helps prevent surprises. Once you have your keys, immediate actions like changing locks, updating utilities, and securing legal documents protect your investment.
Takeaways
- Earnest money shows commitment but is at risk if you back out for non-contract reasons.
- Avoid big financial changes before mortgage approval.
- Conduct inspections, appraisals, and title checks thoroughly.
- Review and understand the Closing Disclosure and have funds ready.
- Protect yourself from scams and secure your home and documents after closing.
- Use a checklist to handle repairs, utilities, and legal matters efficiently.
FAQ:
How long does the closing process take?
Typically 30 to 60 days if you have a mortgage.
What is earnest money?
A deposit (1%-3% of the sale price) showing good faith. You risk losing it if you back out for reasons not allowed by the contract.
What inspections are important?
Structural, electrical, plumbing, pests, and appliances. Attend inspections and ask questions.
How should I handle closing funds?
Use a cashier’s check or wire transfer. Verify all instructions with trusted contacts.
What should I do immediately after closing?
Change locks, transfer utilities, secure legal documents, address repairs, and update your estate plan.
How do I avoid scams?
Verify all instructions with trusted professionals. Be cautious with emails or calls requesting payments or personal data.
