Three Things Buyers Need to Do Before Closing on a House

A closing is more than turning over keys.
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The closing on a house is the finalization of the buying and selling process. The seller collects his funds while the buyer takes ownership. The closing consists of signing papers, exchanging monies and receiving copies of legal documents. But prior to the closing, the buyer has some responsibilities to execute to ensure the closing goes off without a hitch.


An appraisal will be solicited by the lending company, but it is the financial responsibility of the buyer. Basically, the bank, mortgage company or other lending institution wants to be sure the collateral for the loan has a value more than or equal to the loan amount. In other words, a mortgage cannot be for a higher amount than what the property is worth.

An appraisal is calculated on attributes of the house such as square footage, the neighborhood, the floor plan, amenities, landscaping and any other special features. The value of the home is also determined by making comparisons to similar homes that have sold recently. An appraisal report will be issued to the lending company and may include recommendations for repairs to be made prior to the closing.

Title and Insurance

The buyer must be sure that the house he is buying has a clean title. In other words, the house must be free of any liens, judgments, assessments or unpaid taxes. A title company will accomplish this task for the buyer. First, its attorney will research the property by obtaining a plat map and performing name searches. Once the attorney offers the stamp of approval on a clean title, the title company will issue a title insurance policy to the buyer and the lender. This is the title company's guarantee against any claims that could occur in the future.

The buyer must also secure a homeowner's insurance policy on the house before the closing. Again, this offers protection for both the buyer and the lender. The lender must be named as the mortgagee. A homeowner's insurance policy provides coverage on the structure, the contents of the home and liability should someone get hurt while on the property.


At closing, the seller expects to receive payment in full. The buyer must secure his financing in advance of the closing so this transaction can take place. In most cases, the buyer will be prequalified for a loan even before making an offer on a house. The bank or mortgage company will assess the buyer's financial situation and determine how much money it is willing to lend him based on that assessment. Once the buyer finds a house and makes an offer, he then must lock in that financing commitment with the lender.

Other Items

Though not mandatory before a closing, there are other items a buyer should complete before the closing. A home inspection will uncover any serious flaws such as structural deficiencies, faulty electrical or plumbing systems and even a leaky roof. The results of an inspection can open up the possibility for a price renegotiation based on the estimated costs of repairs.

The buyer should also arrange for a termite inspection on the house. A termite letter is issued after an inspection by a licensed exterminator determines the property is free and clear of subterranean pests.

A final walk-through should be done by the buyer just prior to closing. This ensures the property is in the same condition it was when the buyer made the purchase offer.

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