Steps Between Signing and Closing on a Home
Closing on a home is one of the most exciting milestones in the buying process. Yet between signing the purchase agreement and the actual home closing day, there is a critical window of activity that can make or break the transaction. Understanding each step of the home closing process will help you stay prepared, reduce stress, and ensure there are no surprises along the way.
Entering Escrow or Going Under Contract
Once you and the seller sign the purchase agreement, the transaction moves into a defined holding period before closing. In some states this is called escrow, while in others it may be referred to as being under contract, pending, or in attorney review. No matter the term, the purpose is the same during the home closing process: to give both parties time to complete their obligations before ownership officially changes hands.
If escrow is used, a neutral third party such as an attorney, title company, or escrow officer manages the funds and key documents. The buyer typically deposits earnest money into the escrow account to demonstrate their commitment to the purchase. In areas where the term “escrow” is not used, the earnest money may be held by the brokerage or a title company until closing.
What Goes Into an Escrow Account
The escrow account (or equivalent holding arrangement) contains more than just earnest money. It typically holds essential documents such as the deed and any other required seller-provided paperwork. These remain secure until all contingencies are satisfied. Only when both parties meet the terms of the agreement will the funds be released to the seller and the property transferred to the buyer.
Securing Financing and Meeting Lender Requirements
If you are financing your purchase, the next priority is obtaining final mortgage approval. This involves satisfying lender requirements, which often include a professional home appraisal, a title search to confirm legal ownership, and proof of insurance. Homeowners insurance protects against risks such as fire, theft, and certain natural disasters, while other coverage options such as flood insurance, title insurance, or mortgage insurance may be required depending on your circumstances. Mortgage insurance is typically necessary if your down payment is less than 20%.
Understanding the Appraisal
A home appraisal is a professional assessment of the property’s value conducted by a licensed or certified appraiser. For financed purchases, this step is mandatory to ensure that the lender is not providing a loan amount higher than the property’s market value. If the appraisal comes in lower than the agreed purchase price, it may require renegotiation with the seller or adjustments to your financing. Even cash buyers often choose to order an appraisal for peace of mind during the home closing process.
Considering a Home Inspection
While not always required, a home inspection is one of the smartest steps a buyer can take. I highly recommend a home inspection, read more about Home Inspection Are Always Worth I 100%. A licensed inspector will assess the home’s structure, systems, and overall condition, checking for potential issues such as plumbing leaks, electrical hazards, or structural weaknesses. Specialty inspections may also test for radon, asbestos, or lead paint. Identifying problems before closing gives you the opportunity to negotiate repairs or reconsider the purchase.
Timelines and Moving Plans
The time between signing and closing can vary significantly based on the complexity of the transaction and the parties involved. While some closings happen within a month, others can take several weeks longer due to scheduling delays, inspection findings, or financing hurdles. Because each step operates on its own timeline, buyers should build in flexibility for moving plans and coordinate closely with their real estate agent as the home closing process unfolds.
What Happens on Closing Day
Closing day is when the home closing process comes to an end and the transaction becomes official. You will review and sign the necessary legal and financial documents, transfer your funds for closing, and receive the keys to your new home. Closing costs may include loan origination fees, title charges, prepaid property taxes, inspection fees, and insurance premiums. Your real estate professional or attorney will walk you through the paperwork and ensure that all requirements are met before the deed is recorded in your name.
Final Thoughts
The journey from signing the purchase agreement to closing is full of important steps that require attention to detail. From escrow or under contract to lender requirements and inspections, each task brings you closer to ownership. A knowledgeable real estate professional can guide you through each stage, coordinate with other parties, and ensure that nothing is overlooked.
If you are preparing to buy a home and want a smooth, stress-free transaction, I can connect you with one of my trusted real estate partners anywhere in the country who will make sure you are well-supported from start to finish.
