Buying a home? What to expect when you're closing
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On closing day, all parties will sign the papers officially sealing the deal, and ownership of the property will be transferred to you. It's your opportunity to make any last-minute changes to the transaction.
It starts the day before
The day before closing, gather all the paperwork you have received throughout the homebuying process: Loan Estimate, contract, proof of title search and insurance if necessary, flood certification, proof of homeowners insurance and mortgage insurance, home appraisal, inspection reports and Closing Disclosure. You might need to refer to these documents at closing.
Most home-sale contracts entitle you to a walk-through inspection of the property 24 hours before closing. This is to ensure that the seller has vacated the property and left it in the condition specified in the sale contract.
If there are any major problems, you can ask to delay the closing or request that the seller deposit money into an escrow account to cover the necessary repairs.
Your roles on closing day
At closing, your participation will involve a couple of steps:
- Sign legal documents.This falls into two categories: the agreement between you and your lender regarding the terms and conditions of the mortgage, and the agreement between you and the seller transferring ownership of the property. Be sure to read all documents carefully before signing them, and do not sign forms with blank lines or spaces.
- Pay closing costs and escrow items.There are numerous fees associated with getting a mortgage and transferring property ownership. Usually, the borrower pays these fees with a check at closing. Some fees can be added to the loan balance, or the borrower can pay a higher interest rate and have the lender pay the fees.
Present at closing
Closing procedures vary from state to state and even county to county, but the following parties will generally be present at the closing or settlement meeting:
- Closing agent, who might work for the lender or the title company.
- Attorney: The closing agent might be an attorney representing you or the lender. Both sides may have attorneys. It's always a good idea to have an attorney present who represents you and only you.
- Title company representative, who provides written evidence of the ownership of the property.
- Home seller.
- Seller's real estate agent.
- You, also known as the mortgagor.
- Lender, also known as the mortgagee.
The closing agent conducts the settlement meeting and makes sure that all documents are signed and recorded and that closing fees and escrow payments are paid and properly distributed.
You will receive the following important documents:
|Closing Disclosure||This five-page document provides details of the mortgage loan, including the loan terms, estimated monthly payments and closing costs. You are not supposed to receive this for the first time at the closing table; the lender is required to give it to you at least three business days before you close on the loan. During this period, you are encouraged to compare the Loan Estimate with the Closing Disclosure.|
|Mortgage note||This document states your promise to repay the mortgage. It indicates the amount and terms of the loan and what the lender can do if you fail to make payments.|
|Mortgage or deed of trust||This document secures the note and gives your lender a claim against the home if you fail to live up to the terms of the mortgage note.|
|Certificate of occupancy||If you are buying a newly constructed house, you need this legal document to move in.|
Once you've reviewed and signed all closing documents, the house keys are yours and you will have successfully bought your new home!
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