Whether you’re the buyer or seller closing is an important day. Closing a real estate transaction is the process by which legal ownership of property is transferred from the seller to the buyer. If you’ve made it this far, you’re well aware of everything involved leading up to this grand occasion. With that said, hopefully the below will shed some light on a few more granular details as it relates to closing specifically.
What happens before closing?
The process to closing is put into motion when the seller and buyer sign the purchase agreement. The actual closing, however, usually takes place four to six weeks after the agreement has been signed.
Because what happens before closing looks different for the buyer and the seller, I’m going to break down the two separately.
As the buyer, you will:
- Review your closing disclosure (CD): The CD is the document that breaks down the transaction numerically so you know what costs you are paying to secure the loan, your payment, interest rate, etc. This document must be provided to you at least three business days prior to closing but typically it’s well in advance of that.
- Secure certified funds in the form of a cashier’s check or a wire transfer in some cases so that if you need to bring money to closing it’s in an acceptable method and based on the figure provided on the CD. Typically, this is done either the day before or the same day as closing.
- Do a final walk-through of your new home, which usually happens 24 hours before closing. This is to make sure the previous owner has vacated and, if applicable, ensure any problems noted in the home inspection were repaired as agreed upon.
- Ensure you have a valid (non-expired) government-issued ID. It will be necessary at the day of closing.
As the seller, you will:
- Complete any repairs or changes to the home as agreed upon in the sales contract.
- Bring any items that have to do with the entry, exit or security features for the home, such as keys, garage door openers or PIN codes.
- Review the title commitment to ensure accuracy and/or address any questions or perceived discrepancies (i.e. easements, special assessments, taxes, liens, etc.).
- Ensure you have a valid (non-expired) government-issued ID. It will be necessary at the day of closing.
What happens at closing?
The actual closing itself takes place at the title or escrow company. The three main things that happens at a closing are the title transfer from the seller to the buyer, the proceeds of the sale being distributed to the seller and the signing of legally binding documents.
Important documents at closing:
- Closing disclosure: As mentioned previously, you will receive an advanced copy of this.
- Initial escrow statement: Contains any payments the lender will pay from your escrow account during the first year of your mortgage, including taxes, mortgage insurance (if applicable), homeowner’s insurance and any other secondary items, if applicable (i.e. flood, etc.).
- Mortgage note: States your promise to repay the mortgage and indicates the amount borrowed, and also includes what the lender can do if you fail to make payments.
- Mortgage or Deed of Trust: Secures the lender’s interest and claims against the home.
Who will be there?
- Closing and/or escrow agent
- Sellers along with the seller’s agent
- Buyers along with the buyer’s agent
- A representative from your lender
- If applicable, any real estate attorneys involved
Closing day should be a fun and stress-free experience for all involved. From a lender’s perspective, we want the closing to just be a formality of the expectations already set in the weeks leading up to it. It’s a day to remember, especially if it’s your first home, so enjoy the experience.
