Get excited! It’s time to close on your home. Here’s a complete guide to what to expect at your home closing. 

You’ve worked with a real estate agent, toured an endless number of properties, got an offer accepted, navigated the mortgage process, and now you’re in the final stretch. There’s just one step left: closing.
So what is closing, exactly, and what does it consist of? Here’s a simple guide to everything you need to know about closing on your first home.

Understanding the basics of home closing

A home closing—also known as the settlement—refers to the date when a property’s title and deed are transferred to the buyer, officially making them the new owner. It’s also an opportunity to review all the closing documents, make sure the title is clean, and release any funds that have been held in escrow to the parties that are owed money. It’s the final reassurance for everyone involved in the purchase that the transaction is secure.
The closing process typically involves a number of different parties:

  • You: The buyer.
  • The bank: Your mortgage lender.
  • Closing agent: This person might work for the lender or the title company.
  • Real estate attorney: They can represent you or the seller, or both sides may have attorneys.
  • Title company representative: The title company insures the title status during closing.

These people are involved in the sale but not typically present at the closing:

  • Seller’s agent: The individual who arranges the transaction between buyer and seller.
  • The seller: The current homeowner.

There are three basic steps to the closing process: signing mortgage documents, completing paperwork to transfer the estate, and transferring payment.

1. Signing mortgage documents at your home closing

Home Closing Guide
During the first step, you will complete and sign all documents pertaining to the loan you’re taking out to buy the home. You will be required to sign all mortgage documents provided by the lender, including:

  • Note: This is essentially your loan contract, and usually includes a promissory note. It outlines the terms of the loan, any prepayment penalties, and confirms your guarantee to pay it back. It also allows the bank to foreclose on the property should you default on the loan.
  • Name affidavit: This certifies that you are who you say you are.
  • Truth-in-Lending statement: This document discloses specifics on the interest rate, annual percentage rate (APR), amount financed, and total loan cost over its life.
  • Monthly payment letter: This breaks down your monthly mortgage payment, so be on the lookout for any surprise additions or confusing costs.

Recently, many title companies and lenders have shifted to electronic documents, so you can sign most of these documents before your actual closing. If e-docs aren’t available, be prepared to read and review anywhere from seven to 20 documents in person.

2. Completing paperwork for property transfer

The second phase of closing allows you, the seller, and the title company representative to review all of the relevant paperwork prior to signing. You will all exchange, verify, and endorse:

  • Insurance certificate: Your lender will want proof that you’ve insured the home.
  • Bill of sale: This document lists all of the personal items that are included in the sale, such as appliances and any furniture.
  • HUD Form 1 or disclosure/settlement statement: This paper covers the actual settlement costs and amounts, and should be explained by the closing broker or agent.
  • Deed: This piece of paper is your proof that ownership of the home has been transferred to your name. It should include the names of the buyer and seller, property description, and usually guarantees that the seller has the right to sell the property.
  • Proration agreements: These documents detail how you and the seller are dividing up the costs of the home for the month in which it is bought (e.g.. the seller may have already paid property taxes, so the buyer would need to reimburse the seller for a portion of it).
  • Acknowledgement of reports: This declares that the buyer has seen all reports pertaining to the property, such as surveys and inspections.

Many of these documents must be notarized and some have very particular specifications, so be sure to check with your real estate agent.

3. Transferring payment at your home closing

The final step of closing involves transferring various payments to participating parties, namely, the costs you’ll be paying for the process and transaction. Here are some of the costs you’ll need to be aware of:

  • Closing costs: You will be expected to help cover these fees, which can include appraisal fees, title insurance costs, inspection fees, attorney fees, and application costs. Learn more about closing costs.
  • Property payment: At your closing, you’ll hand over the down payment minus the earnest money deposit you paid when your offer was accepted. Your agent will let you know what forms of payment are accepted, usually a money order or wire transfer.
  • Escrow: Payment of the buyer’s annual taxes, insurance, and other costs may be covered by the lender, and a reserve account will be established.

Thanks to electronic payments and documents, your actual closing should go very smoothly. Just be sure you communicate with your agent beforehand and arrive with everything you need. Now, all that’s left is to receive your keys and move in!

Elizabeth Yun
Liz has been a writer and editor for over 15 years. Over the course of her career she has covered real estate, tech, health and wellness, and fitness for a variety of print and digital publications. Her writing has appeared in Men's Journal, Everyday Health, Muscle & Fitness, and HuffPost. She spends the majority of her free time rock climbing, making ceramics, experimenting with new cuisines, and exploring the outdoors.

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