February 17, 2016

How It Works: The Closing Process

How it works

Closing, or settlement, is a meeting where final documents are signed, and ownership of the home is transferred from the seller to you.

Who and Where?

Closings usually take place at a title company with the following people represented:

  • Your real estate agent
  • A closing agent
  • You and any co-borrower(s)
  • The seller's real estate agent

What Will Happen?

  • 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.
  • You will sign a document indicating that you have accepted the mortgage loan from your lender.
  • You will sign several affidavits and declarations, which are legally binding documents that spell out your financial obligations and rights as a homeowner.
  • 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.
  • The title company will prepare and record all the documents.

Important Tips:

  1. Three business days before closing, you’ll receive your Closing Disclosure, laying out the terms of your loan including an itemized list of fees associated with the closing.
    • Review your closing disclosure closely. If you note any large variations from the estimated costs your lender originally provided, reach out and ask questions.
    • Schedule a walk through of your new home, making sure it's in the condition you and the seller agreed upon.
  2. Don't feel rushed and ask questions about anything you don't understand!

Learn more about the documents you'll see at closing and how to get prepared.

Follow this series to learn more about how things work in the mortgage industry and visit My Home by Freddie Mac SM where we discuss it all.