Buying a house is complicated with buyers and sellers negotiating and inspections and appraisals to be done. Then, there is the closing process for that dream house, that last step in the long list of steps to get to moving day.
And, of course, closing has steps of its own. Michelle Castle, branch manager at Sherman’s Guild Mortgage, explained there are many steps in the closing process.
“In Texas, you close at the title company,” Castle said. “In other states, you do it at the attorney’s office. This is where the final loan papers are signed; it can last from as little as two weeks to as much as 30 days.”
According to Castle, that time frame depends on three variables — verification time, appraisals and title work. She noted that most closings occur around the 30-day mark.
“One factor is the seller; once the inspection and appraisals come back, they know it’s a go and they can actually pack,” Castle said. “That process alone takes time, too.”
As a lender in the community, Castle listed her responsibilities in the overall process. She is responsible for helping applicants complete loan applications and obtaining documentation to support the application. The applicants sign federal loan disclosures stipulating how the loan is setup, and then the lenders can begin to process the application.
“This is when the third-party verification of the documentation begins and the ‘closing’ clock begins ticking,” Castle said. “And during this time, the inspection is done and sellers address requested repairs.”
Typically, lenders also order the appraisal on the property. Then, the title company begins its work to determine if any liens are against the property. Easements are also considered in the process. When all this work is done, the loan is underwritten by the lending program used, which is usually FHA, conventional or VA.
“The title company and lender then work together to get the closing disclosures ready; this includes the final figures and terms of the loan,” Castle explained. “This has to be ready by three days before closing.”
Real Estate Agents play a part in the overall closing process as well, according to Traci McCarthy of Ebby Halliday Realtors in Sherman.
“Once the date is set, all the paperwork is done by the title company, but we might help buyers and help get necessary paperwork in the right place,” McCarthy said. “Once we get the Closing Disclosure, we set up the final walkthrough.”
McCarthy explained that the buyer does a walkthrough of the property during one of those three days prior to the final closing date. A cashier’s check is provided or funds wired at closing. According to McCarthy, fraud during the closing process is a growing problem in real estate; it’s the title company that handles the signing of all paperwork.
In addition, real estate agents deal with the sellers in the closing process. McCarthy listed that the sellers get a closing disclosure, but it has no date requirement. It can be simple if done right, she added.
“Another item for buyers is the home warranty; if they want one, it must be on the closing documents,” McCarthy said. “Everything must be documented. This will make the process go faster if done from the beginning.”
McCarthy noted that who closes first doesn’t matter but the buyer can’t take possession of the property unless it has been officially closed.
“Usually, the buyer goes first since they are to ‘fund’ the loan that actually purchases the property, then the seller closes, usually the same day,” McCarthy said. “Whatever works easiest is best.”
McCarthy went on to explain that a few things can speed up the process.
“Paying with cash or if the buyer has done the pre-underwriting of their loan,” McCarthy. “This is called close to cash, which is quicker — somewhere around the 15-day range.”
She noted that the buyer would have had to do that underwriting documentation and verification prior to beginning the closing process, which does take time. Just not during the actual closing time frame in that case.