With housing inventory still lagging, sellers continue to have the upper hand.
What is a closing?
Closing is one of the final components to the homebuying process in which the sale of the property takes place. A buyer signs lender agreements for his or her mortgage while the funds transfer to the seller to complete the transaction.
The closing process is one of the final steps in a home purchase. At this point, the homebuyer and seller agree to the terms of the sale, a home inspection and appraisal are completed, and the mortgage lender completes its approval of the transaction.
During closing, the buyer will sign formal documents and the lender agreement with the mortgage lender, agreeing to the terms of the deal. This is the legal signing of the mortgage loan.
In the closing process, a title agent usually meets with the buyer and seller to have these documents signed in person. In some cases, this is done electronically or directly by the mortgage lender.
The closing process involves agreement to the terms as well as the transfer of title from the home seller to the buyer. This transfers ownership from the seller to the new owner.
Mr. and Mrs. Smith find a home that they want to buy, place an offer on it and receive acceptance from the seller. The Smith’s mortgage lender approves the home purchase and drafts documents.
A title agent meets with the Smiths for the signing of the loan documents and for the transfer of ownership from the seller to the buyer. This is the settlement or closing of the loan.
Once complete and filed, a title will be issued to the homebuyer and the real estate agent will hand over keys to the buyer from the seller. The lender also transfers payment for the loan to the seller after the closing occurs.
The first step in getting to the point of closing is obtaining a mortgage loan. Compare mortgage rates and use Bankrate’s mortgage calculator to get the process started.