After the Sale

You've finally put an offer on a home, and the seller accepted. Your American Dream is finally coming together. What happens now? This part of the home buying process can seem a little confusing to some buyers.

The first step in closing is submitting your loan application. Your lender will require a couple of things before your application can be approved. They will need to run a credit check on you and will require an appraisal and survey of the property. Once the credit check, appraisal and survey have been approved, a new deed, note and mortgage will be prepared. The title to the property will be checked to determine who is the legal owner of the property and what debts are owed.

Once everything is in order, the settlement/closing process will begin. The ownership history of the property will be assessed to insure nobody other than buyer will have claim to the property and that all taxes have been paid. The seller will sign the new deed to you, and you will sign the new note and mortgage. The old loan on the property will be paid, and the new loan will be put in place. The seller, realtor, attorneys, title company and others performing services for you will be paid. Title insurance policies will be issued to you and your lender.

The six steps to closing

  1. The order is received.
    An “escrow contract” (agreement to close) starts the process. Any earnest money is deposited into the title company escrow account.

  2. Tax Check
    The various taxing authorities are contacted to ensure that all taxes on the property have been paid. The base rate for each taxing authority is also obtained so that the current year's taxes can be prorated between the buyer and seller.

  3. Title Search/Abstracting
    Copies of documents relating to the property are gathered from various public records. A complete ownership history including any deeds, notes, paving assessments, liens, wills, divorces, etc. is created.

  4. Examination
    The examiner studies the flow of ownership to make sure that each transfer was handled correctly and legally in order to ensure that the new buyer's claim to ownership is the only claim on the property.

  5. Commitment/Typing
    Finally, a commitment for title insurance is created, signed, and provided to the buyer. The buyer now reviews the commitment to make sure the title company has not uncovered anything that the buyer was not aware of during the purchase negotiations.

  6. Settlement
    An escrow officer oversees the closing of the transaction. The seller will sign the deed to the buyer, and the buyer will sign the new mortgage. The old loan is paid, and the new loan put in place. The seller, realtors, attorneys, title company, and others involved are paid.