How to Close on a House
Buying a house can be one of the most exciting, challenging and rewarding experiences of a persons life. Home ownership is often considered the essence of the American dream, but most people can't buy a home outright. "Closing" on a home is when mortgage documents are signed and fees are paid, and plenty of steps lead up to making sure this goes smoothly.
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Instructions
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Get pre-approved for a mortgage. This can help you ensure that you look only at homes in your price range. You can get pre-approved by applying for loans with lenders, which typically requires submitting your credit information and income information. You may need to provide proof of income, records of investments, tax returns, your Social Security number for a credit check, and other details.
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Make an approved offer on a home. After you are pre-approved, you should know how much you can afford and should be able to find the appropriate home in your price range. Once you do, your real estate agent (or you) will need to submit a written offer. If the buyer approves your offer, you put a deposit in escrow and begin the closing process.
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Have the home inspected and appraised and have a title search run. The bank or real estate agent that is issuing your mortgage will often take care of this for you, as they want to ensure that they are protecting their investment. The home appraisal involves an independent appraiser certifying the value of the home, while the inspection checks the home for structural defects and the title search makes sure that no one has any liens or claims on the home other than the sellers.
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Secure the required insurance. Your bank will usually require you to have homeowners' insurance before closing on a house. At times, this can be purchased by the bank and built into the cost of your mortgage, so make sure you find out if that is an option or if you want this service.
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Sign the papers to close on the house. After the inspection and appraisal, you will go to the office of the lender issuing your mortgage (the same lender who pre-approved you) and sign the official closing documents. At this time, you will need to pay closing costs, your down payment, fees and the cost of any points you want to purchase. Points are money you pay to lower your interest rate, which is optional. At times, closing costs and fees can be built into your mortgage, and if this is the case, you will not need to pay fees when you sign the documents to close on the home.
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