What to expect when closing on your new home
Whether you're buying your first home or are a real estate veteran, the closing process can be a whirlwind. "Closing" simply refers to the day you complete the deal. You close on the property purchased and on the mortgage or loan used to finance the purchase, and the seller receives the money.
Closing can be stressful for anyone, with a lot of details, a lot of paperwork and a lot of signatures. Some of what happens can depend on where you live and local customs, but being prepared and knowing what will happen can ease your anxiety.
A closing can take place at a number of locations – typically at the offices of a title company or your lender or real estate attorney – and a neutral third party such as a closing agent will preside over the documents, signatures, instructions and payments. Depending on the situation (such as what state you live in) the closing could include your attorney or real estate agent, the seller and their attorney, a representative from your lender or a title company, a closing officer and a notary public.
As part of the closing process, you will review a series of documents to make sure they are correct and you know what you are agreeing to. Most closings are actually two closings – on your house and mortgage – so there will be documents for each. The main mortgage documents include a Promissory Note, Truth in Lending Statement, Mortgage or Deed of Trust, and Monthly Payment Letter. The documents dealing with the real estate include a Settlement Statement, Warranty Deed, Proration Agreements and Abstract of Title, among others. Bankrate.com and Zillow.com both offer helpful lists along with explanations.
Once certainty is that your closing day will also require some money on hand. A certified or cashier's check will be required to pay your down payment as well as escrows (interest, taxes, insurance) and your portion of the closing costs, which are agreed to ahead of time in the Settlement Statement. You will also need to show proof of homeowner's insurance and might be required to open an escrow account with your lender.
The final step in closing is when the closing agent records your deed with the county government. Once the deed and security instrument are filed, the property is officially yours.
For more, the U.S. Department of Housing and Urban Development also offers some more detail on what to expect at closing.