Closing day is the finish line in a home purchase—it’s when all the documents are signed, money is exchanged, and ownership officially transfers from the seller to the buyer. Here’s what happens step by step:   ⸻   🗓️ What Happens on Closing Day?   ✅ 1. Final Document Signing   You (and the seller) will sign a stack of legal documents, including: • The closing disclosure (confirms all final costs) • The mortgage agreement and promissory note • The deed (transfers ownership from seller to buyer) • Tax documents and any local/state disclosures   You’ll usually sign these with a closing agent, escrow officer, title company rep, or attorney, depending on your state.   ⸻   💰 2. Payment Is Made   You’ll bring your down payment and closing costs, typically as a certified check or wire transfer. Your lender will also wire the loan funds to the title company.   Everything is double-checked to make sure funds match the contract.   ⸻   🔍 3. Title Is Transferred   The title company ensures: • The deed is recorded with the county • The seller is paid • Any existing mortgages, liens, or taxes are paid off • You now legally own the property   ⸻   🏡 4. You Get the Keys!   Once the paperwork is complete and funds have cleared: • You’re handed the keys (or given instruct

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ions for pickup) • You can officially move in, unless otherwise agreed (e.g., seller rents back temporarily)   ⸻   📦 Pro Tips for a Smooth Closing Day: • Do a final walkthrough 24 hours before closing to confirm the home is in the agreed condition • Bring your photo ID, any required documents, and confirmation of your wire transfer or check • Ask questions—you’re signing big legal documents, so it’s okay to take your time   ⸻   🔚 Bottom Line:   Closing day wraps up all the work, money, and emotions that go into buying a home. After signing the papers and transferring funds, you become the official owner.

 

Closing costs are the fees and expenses—beyond the down payment—that buyers and sellers pay when a real estate transaction is finalized (“closed”). These costs cover everything from lender fees to title services, and they typically range from 2% to 5% of the home’s purchase price.

⸻

🧾 What’s Included in Closing Costs?

🔹 For Buyers:

Buyer closing costs often include a loan origination fee charged by the lender for processing the loan, and an appraisal fee to have the home professionally valued. You may also pay for your credit report, title insurance, and a title search to ensure the home has no legal claims or liens.

Other common costs include recording fees (to make the sale official with the county), attorney fees (in states where required), and prepaid items like a few months of property taxes and homeowners insurance. Many lenders also require an escrow account to hold funds for future taxes and insurance. In some cases, you might also pay a survey fee if the property boundaries need verification.

🔹 For Sellers:

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Sellers typically pay the real estate agent commissions (often 5–6% of the sale price, split between the listing and buyer’s agents), any outstanding property taxes or liens, and title transfer fees. Depending on negotiations, sellers might also agree to cover some buyer closing costs.

⸻

🏦 Can Closing Costs Be Rolled Into the Loan?

Yes, sometimes—especially during a refinance. On a home purchase, you may be able to negotiate with the seller to cover some costs or use lender credits (where you accept a slightly higher interest rate in exchange for reduced upfront costs).

⸻

💡 How to Reduce Closing Costs:

You can reduce your closing costs by shopping around for lenders, comparing title service providers, and asking questions early. Be sure to review the Loan Estimate (provided early in the loan process) and the Closing Disclosure (given a few days before closing) so you know what you’re paying.

Also, look into first-time homebuyer programs or local assistance options that may help cover part of your closing expenses.

⸻

✅ Summary:

Closing costs are an essential part of any real estate deal. While they may seem like a lot, many of the charges are negotiable, and there are ways to plan ahead and even reduce them. If you’re budgeting to buy a home, make sure to factor in these costs so you’re fully prepared on closing day.

 

 

💵 So, How Much Do You Need to Buy a Home?   The amount depends on several factors: the loan type, the purchase price, your credit, and closing costs. Here’s a breakdown:   ⸻   🔑 1. Down Payment Options   You can buy a home with as little as 0% to 5% down in many cases: • Conventional Loans: • Minimum down: 3–5% (depending on income and loan program) • 20% down eliminates mortgage insurance but isn’t required • FHA Loans (government-backed): • Minimum down: 3.5% • VA Loans (for veterans): • 0% down • USDA Loans (for rural areas): • 0% down   🔔 Note: Putting less down means higher monthly payments and mortgage insurance, but it allows many buyers to enter the market sooner.   ⸻   🧾 2. Closing Costs • Typically 2–5% of the home price • Includes fees for loan origination, appraisal, title insurance, taxes, and more • Some lenders or sellers offer credits to help cover these   ⸻   💳 3. Cash Reserves & Prepaid Costs • Lenders often like to see 1–2 months of reserves (money left after closing) • You’ll also pay prepaid costs like property taxes and homeowners insurance   ⸻   💡 Real Example:   If you’re buying a $300,000 home: • 3% down = $9,000 • Closing costs = ~$9,000 (3%) • Total upfront: Around $18,000 (or less with credits or assistance)   Compare that to 20% down = $60,000. Huge difference.   ⸻   ✅ Bottom Line:   You don’t need 20% down to buy a home. Many buyers get in with as little as 3–5%, especially first-timers. Focus on what you can afford monthly, and work with a lender to find the right fit for your situation.  

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🔍 What Is a Home Appraisal?

 

 

A home appraisal is a professional, third-party assessment of a property’s market value. It’s typically required by lenders during a home purchase or refinance to ensure the loan amount doesn’t exceed the value of the property.

 

 

 

🧑‍💼 Who Performs the Appraisal?

 

 

A licensed or certified appraiser—who is neutral and independent—is hired by the lender (but paid for by the buyer or homeowner).

 

 

 

📝 What Factors Affect an Appraisal?

 

 

The appraiser examines:

 

• Comparable sales (recent sales of similar homes in the area)

• Condition of the home (maintenance, repairs, renovations)

• Size and layout (square footage, number of bedrooms/bathrooms)

• Location (neighborhood quality, proximity to schools, amenities, etc.)

• Market trends (local housing demand, price trends)

 

 

 

 

🏠 Appraisal Process Steps:

 

 

1. Inspection – The appraiser visits the home to document condition, layout, features, and upgrades.

2. Research – They review recent sales of comparable properties (comps).

3. Analysis & Valuation – Using this data, they calculate a fair market value.

4. Report Delivery – A formal appraisal report is sent to the lender (and you may request a copy).

 

 

 

 

💰 Why It Matters:

 

 

• For Buyers: Ensures you’re not overpaying.

• For Sellers: Helps you price your home competitively.

• For Lenders: Confirms the property is adequate collateral for the loan.

• For Refinance: Determines how much equity you have access to.

 

 

 

 

❗ What If the Appraisal Comes In Low?

 

 

• Renegotiate price with the seller

• Challenge the appraisal with better comps or evidence

• Bring more cash to cover the gap

• Cancel the deal (depending on contract terms)

 

 

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An Adjustable-Rate Mortgage (ARM) is a type of home loan where the interest rate can change over time, usually in response to changes in a financial index (like the 1-Year Treasury rate or SOFR).   ⸻   🏠 Key Features of an ARM:   1. Introductory Fixed Rate Period • You get a low fixed interest rate for a set number of years (commonly 3, 5, 7, or 10). • Example: A 5/1 ARM means your rate is fixed for the first 5 years, then adjusts once per year afterward.   2. Adjustment Period • After the fixed period, the interest rate adjusts periodically (usually annually). • The new rate is based on: • A benchmark index (e.g., SOFR or LIBOR) • Plus a margin (set by the lender)   3. Rate Caps • Initial cap: Limits how much the rate can go up at the first adjustment. • Periodic cap: Limits increases at each adjustment. • Lifetime cap: Maximum the rate can rise over the life of the loan.   ⸻   📊 Example: 5/1 ARM • First 5 years: Fixed at 4.25% • After year 5: Adjusts annually • Let’s say the cap is 2/2/5 (initial/periodic/lifetime) • Year 6 rate could jump to 6.25% max • Later years could go up 2% per year, but never more than 5% above the original rate   ⸻   ✅ Pros of an ARM: • Lower initial rate = lower monthly payments early on • Good if you plan to move or refinance before the adjustment kicks in • May qualify you for more home upfront   ⚠️ Cons of an ARM: • Rates can rise—your monthly payment may go up significantly • Less predictable than a fixed-rate mortgage • Riskier in a rising interest rate environment   ⸻   💡 When Is an ARM a Good Choice? • You’re only staying in the home for a few years • You expect interest rates to stay the same or drop • You want lower upfront payments and can handle possible increases later

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🔍 What “As-Is” Really Means: • The buyer gets the property exactly as it stands, with all its flaws—visible or hidden. • The seller makes no guarantees about the home’s condition. • The seller won’t fix any issues found during the home inspection. • The buyer still has the right to inspect the property, and can walk away or negotiate based on what’s found—but the seller isn’t obligated to fix anything.   ⸻   🛠 Common Reasons Homes Are Sold As-Is: • Distressed property or fixer-upper. • Estate sales or inherited homes. • Seller is financially unable or unwilling to make repairs. • Investor-owned property.   ⸻   ⚠️ Important Notes for Buyers: • Get an inspection—even if the seller won’t fix anything, you need to know what you’re getting into. • Check disclosure laws in your state—some still require sellers to disclose known issues (like mold, roof leaks, or foundation problems). • Be ready to handle repairs post-purchase, possibly major ones.   ⸻   💬 Real-World Example:   A home listed “as-is” might have an aging roof, outdated wiring, or plumbing issues. The seller says: “Here it is, take it or leave it.” You can still have an inspection—but if the inspector finds problems, the seller won’t negotiate or fix them. You either accept it or back out (assuming your contract allows it).

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🔑 Typical Buyer’s Costs in a Real Estate Transaction

 

 

 

1. Loan-Related Costs

 

 

• Origination fee: Charged by the lender for processing the loan (0.5%–1% of loan amount).

• Credit report fee: $25–$50.

• Appraisal fee: $300–$600 (paid to confirm the home’s market value).

• Underwriting fee: Charged by the lender for evaluating the loan application.

• Discount points (optional): Paid to reduce your mortgage interest rate.

 

 

 

2. Title and Escrow Fees

 

 

• Escrow fee: Charged by the escrow company for handling funds and documents.

• Title insurance (lender’s policy): Protects the lender from title issues.

• Recording fees: Paid to the county for recording the deed and mortgage.

 

 

 

3. Home-Related Expenses

 

 

• Home inspection: $250–$500 (optional but strongly recommended).

• Pest inspection: Often required by lenders (especially VA loans).

• Survey fee (in some states): Verifies property boundaries.

 

 

 

4. Prepaid Costs (Impounds)

 

 

• Homeowners insurance premium (first year paid upfront).

• Property taxes: A portion may need to be prepaid at closing.

• Prepaid interest: Covers the interest from closing day to the first mortgage payment.

• Escrow/reserve accounts: Lender may require reserves for taxes and insurance.

 

 

 

5. Other Potential Costs

 

 

• HOA transfer fees: If buying in a homeowners association.

• Attorney fees (in states where attorneys handle closings).

• Courier or wire transfer fees.

 

 

 

 

💵 How Much Are Buyer’s Costs?

 

 

• Typically range 2%–5% of the home’s purchase price.

• For a $300,000 home, expect $6,000 to $15,000 in buyer’s closing costs.

 

 

 

 

🤝 Can These Costs Be Negotiated?

 

 

Yes. Buyers can:

 

• Negotiate with the seller to pay some or all closing costs.

• Shop lenders for better rates and lower fees.

• Apply for buyer assistance programs in certain states or localities.

 

 

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Welcome to the first episode of House Keys

 

HOUSE KEYS is your go-to podcast for unlocking the world of real estate with clarity and confidence. Hosted by Rob “Birdman” Hephner and featuring trusted real estate expert Stephanie Crain of Mountain Retreat Realty Experts, this series breaks down the complex terms, processes, and decisions involved in buying and selling homes. With over 20 years of industry experience and a reputation for unmatched integrity, Stephanie brings practical insights, real-world examples, and straight-talk explanations that empower listeners at every stage of the real estate journey. Whether you’re a first-time buyer, a seasoned investor, or preparing to sell your home, HOUSE KEYS gives you the tools to navigate the market with ease and assurance.

 

House Keys is brought to you by 

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https://mtnretreatrealty.com