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November 12, 2015

The Closing Process: What to Expect

Homeownership

You’ve saved for it, searched for it, found it, and negotiated over it. Finally, you’re ready to take possession of it – your new home. Before that can happen, however, comes the closing process.

Throughout your home search, you’ve been working closely with your real estate agent, lender, and other members of your team, and should be well-prepared for closing. Here’s what you’re likely to experience during the process – and some steps you should take before coming to the closing table.

Steps to Take in Advance

Essentially, closing day involves the formal, legal transfer of ownership from the seller to you. Closing regulations vary from one jurisdiction to another, but two aspects of the process are usually the same no matter where you buy a home:

  • Your contract should allow you to schedule a walk-through of the property 24 hours before closing. At the walk-through, you need to make sure the seller has completely vacated the property (unless you’ve arranged to rent back the property after closing) and the home is in the condition described in the contract. Make sure required repairs have been made and items that are contractually supposed to convey to you are in place. If the walk-through reveals any problems, you can delay the closing or ask for money from the seller to address the issues.
  • Three days before your scheduled closing, you'll receive your Closing Disclosure form from your lender. You'll want to review this form carefully and ensure that the loan terms and costs align closely with those provided in your Loan Estimate. Be sure to talk to your lender about any discrepancies between the two documents. Learn more about the documents you'll sign at closing.
  • Discuss with your lender how you’ll make the down payment and closing costs that aren’t rolled into your loan. You may be able to transfer these funds electronically based on an estimate before closing, but you could also be required to provide a cashier’s check or certified funds.

 What to Bring to Your Closing

Throughout the home search, you’ve likely accumulated a lot of paperwork. Bring these documents with you to closing in case an issue arises and you need to produce one of them.

  • Your proof of homeowner’s insurance
  • Your copy of the purchase contract
  • Your identification
  • Cashier’s check or certified funds
  • Your checkbook, for the difference between the estimated balance owed and the final amount.

Where and Who?

Your closing will most likely take place at a title company, and the following people will be represented.

  • Your real estate agent
  • Closing agent
  • You and any co-borrower
  • The seller’s real estate agent

What Will Happen?

Step 1. The closing agent will outline the money you owe, such as the remainder of a down payment and taxes, as well as any credits from the seller. All costs will be detailed on your settlement statement.

Step 2. You’ll sign a document indicating that you have accepted the mortgage loan from your lender.

Step 3. You will sign several affidavits and declarations, which are legally binding documents that spell out your financial obligation and rights as a homeowner.

Step 4. Your title company will transfer the money to the seller on your behalf. The seller will sign the deed, transferring ownership of the property to you.

Step 5. The title company will prepare and record all the documents.

Step 6. You’re handed the keys. Congratulations – you’re a homeowner!

Some Final Tips

Twenty-four hours before closing, you should review your settlement statement closely. If you note any large variations from the estimated costs your lender originally provided, reach out and ask questions.

MOST IMPORTANTLY…. Don’t feel rushed. Ask questions about anything you don’t understand!

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