The Steps of Closing a House


In 2020, there were 5.64 million existing homes and 822,000 newly constructed homes that were sold, as the National Association of Realtors reported. If you’re searching for your own new place and aren’t familiar with the entire process, it can feel a bit overwhelming.

A real estate closing is the process of transferring ownership of a property from the seller to the buyer. There is a seller closing costs calculator to help sellers determine the fees they’ll pay, and buyers will also find many options online to help determine the approximate amount of charges in addition to any necessary down payment.How long it takes to close varies depending on the situation, but the two main parts are the mortgage portion and title closing. The buyer will need to fill out and submit all of the paperwork required by the lender, while the title closing is when the seller signs the deed and delivers it to the buyer.

Open an Escrow Account

The first step for closing is to open an escrow account which will be held by a third party like your escrow or title agent, or bank. This is a neutral party account for holding money involved in the sale, such as earnest money or any required deposits.

Home Inspection

It’s important to hire a qualified inspector to conduct a thorough walkthrough of the home. This third-party expert should inspect everything inside and outside of the home. The inspection is usually required by the bank in order to process your mortgage loan. If there are any issues that are revealed, they will need to be resolved before the lender will allow you to proceed with the closing. At this point, if repairs need to be made you have the option to renegotiate the price, provided you haven’t accepted an “as is” contract. If you and the seller cannot come to an agreement, you’ll be able to back out of the contract if you choose.

Mortgage Application

The loan application and approval process requires submitting financial documents and loads of other paperwork such as income statements, bank statements, and tax returns. If you are already pre-approved, this will speed the process significantly.


You’ll almost always need an appraisal done to ensure the value of the home is at least as much as the purchase price that was agreed upon. If it’s lower than that, you might have to renegotiate it with the seller or pay the difference in cash.

Title Insurance

Title insurance, sometimes called hazard insurance, should be purchased. A title agent will perform a search on the title to ensure there are no claims on the property.

Final Closing Documents

You’ll get a formal notice of the closing date and time from your title or escrow agent which will include a list of everything you’ll need to bring. You should also get a closing disclosure that will outline the obligations of your loan, closing costs, etc. Your real estate agent or real estate attorney should review all of this with you.

Within 24 hours of the scheduled closing, you can conduct a final walkthrough of the home to ensure everything is in order and items in the purchase contract are still present. When that’s done, the deposit or earnest money in the escrow account is applied toward the down payment. You’ll need to cover all closing costs and then it’s time to sign the dotted line.