It’s no secret that the process of buying a home can be lengthy and fairly complex – between funding, making an offer, negotiating with the seller to win over the home, and ultimately setting a closing date.
Although there were presumably points of confusion and periods of frustration, the moment the keys are dropped in your hands makes it all worthwhile.
So, how do you get to that point?
Unfortunately, the headache isn’t quite over yet. The day the buyer takes possession of the property depends on a number of various factors working behind the scenes.
Here’s how it all works.
When Can I Move in?
Buyer possession usually occurs after there has been a recording of the deed, transfer of money, and fulfillment of contingencies.
All parties in the transaction, including the buyer and seller, real estate agents, title agents, and attorneys, should determine a move-in date prior to signing the real estate contract.
How to Get the Keys at Closing
Closing can prove to be a hectic day. You’ll be required to sign what feels like a thousand documents and hand over possibly the biggest check you’ll ever sign.
Here’s what needs to happen to ensure you get the keys at closing and can move-in immediately.
Funding
After the purchase agreement has been signed, the buyer is expected to make an earnest money deposit. This is then put into escrow as a sign of good faith that the transaction will be completed.
But this is only a partial amount of the full deposit. The remaining balance of the down payment, as well as closing costs, are due on closing day. The payment of these dues is necessary to convey the title of property to the buyer.
It can be presented in the form of a certified check or through a wire transfer. Keep in mind, a wire transfer is dependent on the bank wiring the funds to the title company on time. If delayed, the entire closing could be put on hold.
It’s important to take note that the down payment does not include closing costs. You will be expected to fully cover the closing costs in addition to the down payment, unless they are rolled into your mortgage payments.
The down payment is a percentage of the purchase price that is paid upfront. Closing costs, on the other hand, are fees due to various parties involved in the transaction, like the real estate attorney, brokerage, and title service.
Don’t let these costs sneak up on you. Take the time to plan and prepare how you’ll get the funds prior to closing.
Purchase Contract and Contingencies
To ensure you get the keys that day, the real estate contract should state that the deed and mortgage are recorded at closing. Everything should be transferred and finalized by late afternoon, ideally before 3 P.M.
You should take note of the contingencies previously added and whether or not they were fulfilled. Any condition that was not met will lead to a delay in closing.
In terms of funding, the appraisal is especially important. This section will detail how much the property is worth in the current residential real estate market. At a minimum, the amount of money you’re borrowing should match the purchase price. Anything less could result in a lending issue that will require further negotiations with the seller.
Allocate sufficient time between the appraisal and closing, ensuring there are no hiccups during or leading up to the closing date.
Documentation
On the day of closing, both the buyer and seller will be expected to sign a ton of paperwork. Each document requires prior preparation to ensure the transfer of title occurs.
The deed officially transfers the property title to the buyer. It is the job of the title or escrow agent to file the deed with the county recorder, showing legal ownership of the property. This is known as recording the deed. However, there have been cases where the deed is not filed correctly either by the escrow agent or the county.
Additionally, there must be an affidavit of title. This is a notarized statement by the seller, which confirms the transfer of ownership and acknowledges any title errors. This requires preparation by the listing agent and the seller.
Finally, there must be a transfer of tax documents. The buyer and seller are required to sign declarations from the county, state and municipal governments. This will then disclose the purchase price and allow for the taxes to be calculated.
Other Possible Possession Delays
Even the most carefully made plans are susceptible to occasional delays.
While a move-in date may be outlined and agreed to by all actors, sometimes the transaction isn’t able to close by that date. Additional loan conditions from your lender are a common reason for this happening.
After the lender collects and reviews loan documents, they are then sent to the underwriter to finalize the mortgage loan.
The underwriter will work to verify your identification, check your financials, and evaluate the risk once more.
At this point, the underwriter may call for a loan condition to be completed before financing is officially authorized. This then leads to a postponed closing.
Loan conditions often call for additional documents and paperwork. If filed right away, the closing date should only be delayed a few days.
