What Happens at a Closing?

If you are a first time homebuyer your goal has probably been to find the perfect home, get a reasonable offer accepted, pass the home inspection with no surprises, and get through all the other steps that lead up to the closing. But what exactly will happen at closing?

You’re not alone in your confusion. Everyone talks about the closing, but most do not explain to you what exactly happens.

Here is a list of things you should know about what will happen when it’s closing time:

• Closing is the final step where ownership of the home is legally transferred over to you. You will formally agree to the sale, sign your mortgage and other documents, and receive the keys to your new property.
  
  
• Any earnest money that you put down on the house with your offer toward the overall purchase price has been held by a third-party settlement agent and will be applied toward the cost of the purchase. Your earnest money gets credited toward the down payment or your closing costs at the time of the closing.
  
  
• Several people may attend the closing, including attorneys that represented the buyer or seller, your agent and the seller’s agent, a closing agent and possibly a notary.
  
  
• The closing will typically be held at one of the real estate agent’s offices or at the offices of the title company, an attorney, or the bank issuing your mortgage.
  
  
• The closing process will start by you reviewing and signing all your loan documents. Note: If something is different from what you expected or agreed to, don’t sign until you resolve the issue.
  
  
• You will need to have provided, or bring with you, documentation of homeowners insurance.
  
  
• You need to provide a certified or cashier’s check to cover the closing costs, prepaid interest, taxes and insurance. You will know this total from your truth in lending statement that is sent to you prior to closing. Essentially, this statement helps you understand all the costs associated with your mortgage and closing.
  
  
• Your lender distributes the funds covering your home loan amount to the closing agent.
  
  
• Closing costs are costs associated with your loan and include discount points, recording fees, loan origination fees, appraisal charges, notary fees, attorney fees, title insurance and more. Typically the total is between 2 and 5 percent of the home’s purchase price.
  
  
• After both you and the seller sign a stack of closing documents and all the bills are paid – such as agent commissions, mortgage payoffs, down payments, closing costs, etc. - your deed is sent to be filed at the county courthouse.
  
  
• It’s officially your home when everything has been completed. You are given the keys, garage door openers and codes to any security systems.

The closing may take an hour or more depending on how chatty everyone is, so be prepared to sign a lot of documents, ask any questions that you may have, and be certain you understand everything before you sign!

Want more information on closing on a home? Check out our article on What to Expect when Closing on Your Home!