Title Search and Title Insurance

A title search and title insurance provide peace of mind and a legal safeguard. They ensure that when you buy a property, no one else can try to claim it later. A title search is an examination of public records to determine and confirm a property’s legal ownership and find out what claims, if any, exist on the property. If there are any claims, they may need to be resolved before the buyer gets the property.

Title insurance is indemnity insurance that protects the holder from financial loss sustained from defects in a title to a property. It protects real estate owners and lenders against loss or damage stemming from liens, encumbrances, or title defects.

Hire an Attorney or a Title Company

While getting legal aid is optional, it’s always better to get a professional legal opinion on your closing documents. The complicated jargon in them can be difficult to understand, even for well-educated individuals. For an appropriate fee, an opinion from an experienced real estate attorney can offer multiple benefits, including hints of any potential problems in the title. Title Companies will insure the title to give the buyer protection against a faulty title that was not recognized at closing. In some states, you may be required to hire an attorney to handle the closing. Check your state’s laws.

Negotiate Closing Costs

From opening an escrow account to hiring a real estate attorney, all involved services and entities must be paid for. These costs can add up if you aren’t careful. For instance, home and pest inspections are crucial to prevent you from buying a property with hidden—and costly—problems. But many such services take advantage of consumers’ ignorance by charging high fees. Even fees for legitimate closing services can be inflated.

Complete a Professional Home Inspection

A physical home inspection is necessary to discover any potential problems with the property. If you find a serious problem with the home during the inspection, you’ll have an opportunity to avoid the purchase or ask the seller to repair the problems. You can also have the seller pay you to complete the repairs (as long as your purchase offer includes a home-inspection contingency)

Obtain a Pest Inspection

A pest inspection is separate from a home inspection. It involves a specialist ensuring that your home does not have any wood-destroying insects, such as termites or carpenter ants. Pests can be devastating for properties made primarily of wooden material. Many mortgage companies mandate that even minor pest issues be fixed before you can close the deal.

A small infestation can spread to become very destructive and expensive to fix. Wood-destroying pests can be eliminated, but you’ll want to ensure the issue can be resolved for a reasonable fee. Better yet, you might be able to get the seller to pay and have pests eliminated before you complete the purchase. Pest inspections are legally required in some states and optional in others.

Renegotiate the Offer

Even when your purchase offer has already been accepted, you may want to renegotiate the price to reflect the cost of any necessary repairs revealed by inspections. You could also keep the purchase price the same, but require the seller to pay for repairs. Even if you’re purchasing the property “as is,” there is no harm in asking. You can also still back out without penalty if a major problem is found that the seller can’t or won’t repair it.

Lock in Your Interest Rate

Interest rates, including those offered on the mortgage, can be volatile and subject to change. Rates are subject to multiple factors, such as geographic region, property type, type of loan applied for, and the applicant’s credit score.

If possible, it is advisable to lock in the interest rate for the loan in advance. That prevents you from being at the mercy of market fluctuations, which could cause rates to rise before you finalize your property purchase. Even a 0.25% rate hike can significantly increase your monthly payments and the amount of time it takes to repay the mortgage.

Remove the Contractual Contingencies

Your real estate offer should be contingent upon the following five things:

• Obtaining financing at an interest rate not to exceed what you can afford
• The home inspection not revealing any significant problems with the home
• The seller fully disclosing any known issues with the home
• The pest inspection not showing any major infestations or damage to the home
• The seller completing any agreed-upon repairs

Such contingencies must be removed in writing by specific dates stated in your purchase offer, a process known as active approval. However, in some purchase agreements, contingencies are subject to passive approval (also known as constructive approval). That means they are considered approved if you don’t protest them by their specified deadlines. Buyers must understand the approval process and take the necessary actions by the required dates.

Meet Funding Requirements

You most likely deposited earnest money when you signed the purchase agreement. Earnest money is a deposit made to a seller indicating the buyer’s good faith, seriousness, and genuine interest in the property transaction. The earnest money goes to the seller as compensation if the buyer backs out. If the seller backs out, the money is returned to the buyer.

To complete your purchase, you’ll have to deposit additional funds into the escrow account. As the original earnest money is generally applied to the down payment, arranging for the various other required payments is crucial before the home purchase is closed. Failure to do so can lead to the sale being canceled, with the earnest money going to the seller. Furthermore, you could still be charged for the various services you used before the deal fell apart.

Final Property Walk-Through

One of the last steps before you sign your closing papers should be to look over the property one last time. You want to make sure that no damage has occurred since your last home inspection. You should also verify that the seller has completed the required fixes and no new problems came up. Finally, check to see that nothing included in the purchase agreement was removed.

Closing on a house can take from a week to 60 days, depending on the property type and whether you are paying cash or financing the purchase.

Understand the Contracts

Paperwork is critical to closing a property deal. Despite there being a stack of papers filled with complex legal terms and jargon, you should read all of it yourself. If you don’t understand something, consult a real estate attorney. Your agent will also be helpful in making sense of any complex legal language.

How Long Does It Take to Close on a House?

Typically it takes 30 to 45 days to close on a house, depending on a few factors like how fast it takes to get a home inspection and whether or not you are pre-approved for a mortgage.