Sign that paperwork. Write those checks. Get those keys!
The closing. It all comes down to this. The grand finale. Once you have the keys, the house is yours. (Cue: Air horn sound!)
Nice work getting this far. You’re almost a homeowner! Let’s run through some questions you may have as you cross the finish line.
What Does "Closing" Mean?
The close or settlement is when you sign the final ownership and insurance paperwork and get the home’s keys.
The closing process technically begins when you have signed a purchase and sale agreement. That agreement should specify a closing date. Typically — from the signing date to the closing date — closing takes four to six weeks. During this time, purchasing funds are held in escrow, where your money is safe until the deal is officially done.
What's a Closing Disclosure?
Lenders must provide borrowers with a Closing Disclosure, or CD, at least three days before settlement. This form is a statement of your final loan terms and closing costs.
You have three days to 3 Key Numbers to Check in Your Closing PaperworkCheck everything! But pay particular attention to 1. interest rate and loan terms, 2. monthly payment, 3. closing costs.review the CD. Compare it to the Loan Estimate you received shortly after you applied for the loan. If you need a refresher on Loan Estimates, you can view a sample version here.
The point of this formal review process is to ensure there are no surprises at the closing table. If there’s a significant discrepancy between the Loan Estimate and CD, notify your lender and title company immediately.Depending on what the underlying issue is, the closing has to stop and a new closing disclosure must be sent out with a new three-day review period.
There are a couple things on the LE that can’t change by the time you get the CD — namely interest rate and lender fees. Some items can change by only 10% (fees paid to local government to record the mortgage might be one); and others can change without limit, like prepaid interest, because it can’t be predicted at the start of the loan process.
When Will the Final Walk-Through Happen?
Most real estate sale contracts allow the buyer to walk through the home within 24 hours of settlement to check the property’s condition. During this final inspection, which usually takes about an hour, you and your agent will make sure any repair work that the seller agreed to make has been completed.
During the walk-through, you’ll also double-check that everything in the house is in good working order. Be sure to:
- Run water in all the faucets and check for leaks under sinks.
- Test appliances.
- Check the garage door opener.
- Flush toilets.Open and close all doors.
- Run the garbage disposal and exhaust fans.
If the home is in good shape — woo-hoo! Your next stop is the closing table.
If anything is amiss, your agent will contact the listing agent and, in most cases, negotiate to get the seller to compensate you at closing — typically in the form of a personal check — for the costs of fixing the problems yourself.
Worst-case scenario: You have to delay closing to resolve problems. In the unlikely event that happens, your agent will help you address the issue.
Who’s Invited to The Closing?
Certain people will be there. Who, exactly, depends on your state. Typically, you will be joined by:
- Your agent
- The seller
- The seller’s agent
- A title company representative
- Your loan officer
- Any real estate attorneys involved in the transaction
The closing usually takes place at the title company, attorney’s office, or the buyer’s or seller’s agent’s real estate office. FYI: Some states, like California, don’t require an in-person, sit-down closing because they’ve enacted legislation that allows for electronic closings with remote notaries.
Nonetheless, as the home buyer, you’ll have to sign what might seem like a mountain of paperwork — including the deed of trust, promissory note (promising the lender you’ll pay back the loan), and other documents. That cramp in your wrist will be worth it once everything is done.