Step 5: The Closing Process

What to Expect from Title Searches, Appraisals, and Final Mortgage Approval

These three steps are essential before closing on a home, ensuring there are no legal issues, the home is valued correctly, and your loan is fully approved.

Title Search (Verifies Ownership & Legal Issues)

A title company or attorney will review public records to confirm the seller has the legal right to sell the home. This process checks for:
Liens or unpaid debts – Ensures the property isn’t tied to outstanding mortgages or taxes.
Ownership disputes – Confirms no one else can claim ownership.
Easements or restrictions – Identifies any rules affecting how the property can be used.

If issues are found, they must be resolved before closing. Buyers typically purchase title insurance to protect against future claims.

Home Appraisal (Confirms Home Value for the Lender)

An appraisal is required by lenders to ensure the home is worth the loan amount. A licensed appraiser evaluates the property based on:
Comparable home sales (comps) – Recently sold homes in the area.
Property condition – Size, features, upgrades, and overall state of the home.
Market trends – Local demand and home price trends.

If the appraisal comes in lower than the purchase price, buyers may need to renegotiate or cover the difference in cash.

Final Mortgage Approval (Underwriting Process)

Once the title is clear and the appraisal is complete, the lender will finalize your mortgage. The underwriting team will:
Verify employment & income – Reviewing pay stubs, tax returns, and job stability.
Check credit score & debt-to-income (DTI) ratio – Ensuring you can handle the mortgage payments.
Confirm assets & down payment funds – Making sure you have the necessary funds in your account.

If everything checks out, you’ll receive a "clear to close," meaning your loan is officially approved, and you can move forward with closing.

Each step helps protect buyers and lenders, ensuring a smooth and legally sound home purchase.

How to Review Closing Documents Before Signing

Before finalizing your home purchase, you’ll receive several important documents that outline the terms of your loan and ownership. Carefully reviewing these documents ensures there are no errors, unexpected fees, or unfavorable terms.

Key Closing Documents to Review:

Closing Disclosure

Summarizes your loan terms, interest rate, monthly payments, and total closing costs. Compare this with your initial Loan Estimate to check for any unexpected changes.

Promissory Note

Your legal agreement to repay the loan. Confirms loan amount, interest rate, payment schedule, and penalties for late payments.

Mortgage or Deed of Trust

Secures the loan against your home. Grants the lender the right to foreclose if you default on payments.

Title & Homeowners Insurance

Ensures you have title insurance (to protect against ownership disputes) and homeowners insurance (required by lenders).

Settlement Statement (HUD-1, if applicable)

Itemized breakdown of all costs, including lender fees, escrow charges, and prepaid taxes.

How to Review Effectively

Read everything carefully – Don’t rush; ask questions if anything is unclear.
Verify numbers match your Loan Estimate – Look for unexpected increases in fees or interest rates.
Check names and property details – Ensure your name, address, and loan terms are correct.
Confirm seller-paid costs – If the seller agreed to cover certain fees, make sure they’re reflected.

Ask about unclear terms – Your lender, real estate agent, or attorney can clarify any concerns.

If you find errors or surprises, request corrections before signing. Once you sign, the documents become legally binding!

Final Walkthrough Checklist for First-Time Homebuyers

The final walkthrough is your last chance to ensure the home is in the expected condition before closing. Here’s what to check:

General Condition

✅ Ensure the home is clean and in the same condition as when you made the offer.
✅ Check for any new damage or issues that may have occurred after the inspection.

Repairs & Agreed Fixes

✅ Verify all agreed-upon repairs from the inspection have been completed.
✅ Request receipts or warranties for any repair work.

Plumbing & Electrical

✅ Turn on all faucets and check for leaks.
✅ Flush toilets to ensure they work properly.
✅ Test all light switches and outlets.

HVAC & Appliances

✅ Turn on heating and air conditioning to make sure they function.
✅ Test all kitchen appliances (oven, stove, refrigerator, dishwasher, microwave).
✅ Run the washer and dryer if included in the sale.

Doors, Windows & Locks

✅ Open and close all doors and windows to check for smooth operation.
✅ Ensure locks and latches work properly.
✅ Verify you have all keys, garage openers, and security codes.

Exterior & Yard

✅ Inspect the roof, siding, and foundation for any visible issues.
✅ Check the condition of decks, patios, and fences.
✅ Confirm that outdoor fixtures and landscaping are as expected.

Miscellaneous

✅ Test smoke detectors and carbon monoxide detectors.
✅ Look for any belongings the seller may have left behind.
✅ Confirm that all utilities are working (water, gas, electricity).

What to Do If You Find Issues

• If something isn’t right, contact your real estate agent immediately.

• Depending on the issue, you may be able to negotiate repairs or request a credit before closing.

The final walkthrough ensures you’re getting exactly what you agreed to—so take your time and inspect carefully before signing!

What to Do Immediately After Closing on Your Home

Congratulations! You’re officially a homeowner. Now, here are the key tasks to take care of right after closing:

Set Up Utilities & Services

✅ Transfer or set up electricity, water, gas, internet, and trash collection.
✅ Contact local service providers to avoid any interruptions.

Change Your Address

✅ Update your address with the U.S. Postal Service to forward your mail.
✅ Notify your bank, employer, insurance providers, and any subscription services.
✅ Update your driver’s license and vehicle registration, if required.

Secure Your Home

✅ Change the locks or rekey them for security.
✅ Set up or update security systems, smart locks, or cameras if needed.

Store Important Documents

✅ Keep copies of your closing documents in a safe place.
✅ Store your deed, mortgage paperwork, and home insurance policy securely.

Review Your Home Warranty (If Applicable)

✅ Check what’s covered under the home warranty.
✅ Keep contact info handy for service providers.

Plan for Maintenance & Repairs

✅ Locate the main water shutoff valve, circuit breaker, and HVAC system.
✅ Schedule routine maintenance like HVAC servicing or gutter cleaning.

Meet Your Neighbors & Learn About the Community

✅ Introduce yourself to neighbors—they can be great resources!
✅ Find out about trash pickup days, HOA rules (if applicable), and local services.

Celebrate & Settle In!

✅ Start unpacking and making your new house feel like home.
✅ Plan a housewarming event or just enjoy the moment—you did it!

Taking these steps will help you transition smoothly into homeownership and start enjoying your new home with peace of mind!