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Sonja B. Selami, P. C. Has Been Recognized As a Distinguished Lawyer by the Expert Network


She began working and home buyers, seller, lender and other real estate entities in a variety of real estate transactions. Welcomed by the Massachusetts Bar Association in 2006, she has since assisted thousands of clients with their real estate needs ...


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Find the best broker for your trading or investing needs See Reviews Latest Videos David Bach: Don't Time the Market Guides Stock Basics Economics Basics Options Basics Exam Prep Series 7 Exam CFA Level 1 Series 65 Exam Advisors Advisor Insights Our network of expert financial advisors field questions from our community. Ask A Question Join Advisor Insights Are you a financial advisor? Showcase your expertise to 20+ million investors. Join Now Financial Advisors Sophisticated content for financial advisors around investment strategies, industry trends, and advisor education. The Investopedia 100 A celebration of the 100 most influential advisors and their contributions to critical conversations on finance. Markets Markets The latest markets news, real time quotes, financials and more. Watchlist Track stocks and ETFs Add New Watchlist Simulator Stock Simulator Trade with a starting balance of $100,000 and zero risk! My Portfolios View the performance of your stock and option holdings Academy Investopedia Academy Learn from the world's leader in financial education Check out all courses Featured Courses Become a day trader Start Learning Excel for Finance Start Learning Latest Courses Investing for Beginners Find Great Value Stocks Cryptocurrency for Beginners Financial Modeling All Courses Site Log In Advisor Insights Log In Newsletters 13 steps to closing a real estate deal By Amy Fontinelle What is this mysterious "closing" you always hear real estate agents referring to when you're shopping for a house? Closing occurs when you sign the papers that make the house yoursBut before that magical (and often stressful) day arrives, a long list of things have to happenThis article will explain what you can expect during the closing process from the moment your offer is accepted to the moment you get the keys to your new home(If this is your first time buying a home, be sure to read "10 Worst First-Time Homebuyer Mistakes" and our "First-Time Homebuyer Guide.") 1Open Escrow Escrow is an account held by a third party on behalf of the two principal parties in a transactionBecause there are so many things that have to happen to complete a home sale, the best way to prevent either the seller or the buyer from getting ripped off is to have a neutral third party hold all the money and documents related to the transaction until everything has been settled(If you haven't submitted your purchase agreement yet, be sure to read "10 Tips for Getting a Fair Price on a Home.") 2Do a Title Search and Obtain Title Insurance A title search and title insurance provide peace of mind and a legal safeguard so that when you buy a property, no one else can try to claim it as theirs later, be it a spurned relative who was left out of a will or a tax collector who wasn't (or thinks he wasn't) paidA title officer will perform a title search to make sure there are no clouds on the title (that is, third-party claims to a property that could call into question or invalidate the seller's ownership of it)If there are, these problems will need to be resolved before the property becomes yours. 3Find an Attorney This is an optional step if you want to get a professional legal opinion on your closing documentsEven most well-educated people can't completely understand their closing documents; an experienced real estate attorney will not only understand them but also know where to look for potential problems in your paperwork(To learn more, read "The Benefits Of Using A Real Estate Attorney.") 4 Get Pre-Approved for a Mortgage  While getting pre-approved for a mortgage is not required to close a deal, it can help you close the deal quicker, as being pre-approved signals to the seller that you have strong financial backingIn turn, being pre-approved can give you more bargaining power when negotiating. Another key advantage of being pre-approved is that certain lenders will offer you a rate lock, which means that you can secure an interest rate for the loan, and not be at the mercy of the markets if interest rates rise before your purchase goes through. 5Negotiate Closing Costs The escrow company can't be expected to provide its services for free, of course, but many companies in this industry take advantage of consumers' ignorance and boost their bottom lines by charging junk feesThough there is some debate over what is considered a junk fee, items to look out for include administrative fees, application review fees, appraisal review fees, ancillary fees, email fees, processing fees and settlement feesIf you're willing to speak up and stand your ground, you can usually get junk fees eliminated or at least reducedEven fees for legitimate closing services can be inflated(Learn more in "Watch Out For 'Junk' Mortgage Fees.") 6Complete the Home Inspection A home inspection is not required, but you'd be stupid not to have one performedIf you find a serious problem with the home during the inspection, you'll have an opportunity to back out of the deal or ask the seller to fix it or pay for you to have it fixed (as long as your purchase offer included a home-inspection contingency)For more on this subject, read "Do You Need a Home Inspection?" and "Real Estate Deal-Breakers That Shouldn't Be." 7Complete the Pest Inspection A pest inspection is separate from the home inspection and involves a specialist making sure that your home does not have any wood-destroying insects (termites or carpenter ants)You wouldn't want to buy a house with termites, as even a small infestation can spread and become very destructive and expensive to fixWood-destroying pests can be eliminated, but you'll want to make sure the issue can be resolved for a cost you find reasonable (or for a cost the seller is willing and able to pay) before you complete the purchase of the homeIn fact, if any pest problem, even a minor one, is found, the mortgage company will require that it be fixed before you can close. 8Renegotiate the Offer Even if your purchase offer has already been accepted, if inspections reveal any problems, you may want to renegotiate the home's purchase price to reflect the cost of any repairs you will need to makeYou could also keep the purchase price the same but try to get the seller to pay for repairs(For more on the art of negotiation, see "Getting What You Want.") If the purchase contract states that you're purchasing the property "as is," you don't have much recourse to ask for repairs or a price reduction, but you can still askYou can also still back out without penalty if a major problem is found that the seller can't or won't fix it. 9Lock Your Interest Rate If you haven't already, you'll need to lock in your interest rateA good lender will watch interest rates closely for you and tell you when rates are at a low point so you can lock thenYou can also watch interest rates by yourself online using your lender's website or a tool like Investopedia's mortgage calculator. It's important to note, though, that since interest rates are unpredictable and fluctuate multiple times a day, you shouldn't drive yourself crazy trying to hit the lowest pointBe satisfied with a rate that you think is reasonable, given current market conditions and that you can comfortably affordAlso, keep in mind that rates vary by credit score, geographic region and the type of loan you're getting, so you may not be able to get the rock bottom rates you hear or see advertised(For more, check out "How Will Your Mortgage Rate?") 10Remove Contingencies If your real estate agent helped you draw up a good purchase offer, it should be contingent on several things: Obtaining financing at an interest rate not to exceed a certain percent that you can afford The home inspection not revealing any major problems with the home The seller fully disclosing any known problems with the home The pest inspection not revealing any major infestations or damage to the home The seller completing any agreed-upon repairs These contingencies often must be removed in writing by certain dates (known as active approval), which should also have been stated in your purchase offer, for your deal to closeHowever, in some purchase agreements, contingencies are passively approved (also known as constructive approval), if you don't protest them by their specified deadlines. 11Funding Escrow You most likely deposited earnest money when you signed the purchase agreementThe purpose of this deposit is to let the seller know that you are serious, or earnest, about your intentionsAfter all, the seller is going to take the property off the marketIf you back out, the earnest money goes to the seller as compensationIf the seller backs out, the money is returned to you. To complete your purchase, you'll have to deposit additional funds into escrowYour original earnest money deposit is generally applied toward your down payment; you'll need to submit the rest of your down payment and pay your closing costs (unless the seller has agreed to pay them). 12Final Walkthrough One of the last steps before you sign your closing papers should be to walk through the property one last timeYou want to make sure no damage has occurred, and nothing has been removed that is included in the purchase(Before you've moved in, make sure to read "7 Smart Steps Every New Homeowner Should Take.") 13Sign the Papers Obviously, one of the most critical steps of closing is signing the paperworkThere will probably be at least 100 pagesAlthough you may feel pressured by the people, who are waiting for you to sign your papers, like the notary and your mortgage lender, read each page carefully; the fine print will have a major impact on your finances and your life for years to come. In particular, make sure the interest rate is correct and that there is no prepayment penaltyMore generally, compare your closing costs to the good faith estimate you were given at the beginning of the process and throw a fit about any fees that are off by more than 10%. The Bottom Line It may seem like the closing process is a lot of work, but perhaps the worst part is the waitingMost of the time, you'll just be sitting on your hands, waiting for someone else involved in the transaction to come throughSo find something enjoyable to occupy your time and distract you while you wait, and feel secure in the knowledge that you've done your research and know how to make your closing process go smoothly. For related reading, see "10 Hurdles To Closing On A New Home." dataLayer.push({ 'event': 'includeLeadGenTable', 'leadGenTier' : '0', 'leadGenVertical' : 'Mortgage', 'leadGenLayout' : ', 'leadGenPage' : 'Article' }); Dictionary: # a b c d e f g h i j k l m n o p q r s t u v w x y z Content Library Articles Terms Videos Tutorials Slideshows FAQs Calculators Chart Advisor Stock Analysis Stock Simulator Exam Prep Quizzer Net Worth Calculator Browse Stocks Mortgage Calculator Work With Investopedia About Us Advertise With Us Contact Us Careers Connect With Investopedia Get Free Newsletters Newsletters

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