The Closing Process for Minnesota Real Estate
Congratulations, you are on your way to owning your very own home! Follow these suggestions (and your Realtors' advice) so that escrow and settlement will go as smoothly as possible. Decide how much money you will put for a down payment. You can choose to put down as much or as little as you want (depending on your mortgage), but remember, the more you put down toward the total price of your home, the less time it will take you to pay off, and the less your mortgage payments will be every month. During this period of purchasing your home, you will need an escrow or settlement company to act as an independent third party so that you know when and who to give your money to get the deed to your new home. The escrow or settlement company will coordinate much of the activity during the escrow period. The listing broker will usually hold the earnest money in a trust account. Ensure that there are sufficient funds in your account to cover this check. The deposit check will be cashed. Assuming the sale goes through, this money will be applied to the home's purchase price.
What is an Escrow?
The period that you are "in escrow" is often 30 days but may be longer or shorter. Each item specified in the contract must be completed satisfactorily during this time. By the time you have opened escrow, you have agreed on the closing date and the contingencies with the seller. Each contract is different, but most include the following:
The inspection contingency
Complete the inspection as soon as possible after the contract to purchase is signed, as unsatisfactory results may mean that you will want to cancel the contract. Once the contract is signed, you have time to secure funding. If, for any reason, you are unable to secure funding during the time granted to you by the contract (and the seller will not provide a written extension of time), you must decide whether you want to remove the contingency and take your chances on getting a loan. You may choose to cancel the purchase contract.
Marketable Title
A requirement is that the seller must provide a marketable title. With an attorney or title officer, review the title report. The title must be "clear" to ensure that you do not have legal issues regarding your ownership. Check into local and state ordinances regarding property transfer and ensure that you and the seller have complied with them.
Home Owners Insurance
Home owner's insurance will be required before you can close the sale. It is in your best interest to apply for insurance as soon as possible after the contract is signed.
Contact local utility companies.
Reach out to the utility companies that service your new area and schedule to have service turned on when you close escrow. Most companies will ask you for your name, new address, and closing date.
Schedule the final walk-through inspection.
At this time, you should make sure that the property is exactly as the contract says it should be. What you thought to be a "permanently attached" chandelier that would come with the property might have been removed by the seller and replaced with a different fixture entirely.
You've made it! Once the sale has closed, you're the proud owner of a new home. Congratulations!