Your loan application was approved, your offer was accepted, and you are ready to move into your dream home. While the prospect of homeownership is on the horizon, you haven't reached the end of your journey yet: it's time to close the deal. Here's what to expect, and how to minimize the unexpected, on the road to closing day.
Closing, also called settlement, is a meeting where the final documents are signed, the closing costs are paid, and ownership of the home is officially transferred to you. After your offer is accepted it takes time to lock all the details in place and set your closing date. According to the latest data, the average time to close a purchase loan is 43 days.
Three days before your closing date, you'll receive your Closing Disclosure. This document will lay out the final details of the loan and closing costs you have agreed to. It will break down your loan terms, projected payments, actual fees, and other costs and credits. Review your closing disclosure carefully. If you note any large variations from the costs your lender provided in your Loan Estimate, reach out for clarification.
You should request a formal walk through of the home 24 hours before closing. Be sure to check that all required repairs have been made, the home is in the agreed upon condition and that the seller has completely vacated the property.
Closing day can be intimidating, there will be lots of paperwork to sign, and the process can take a few hours. Take as much time as you need to read through and understand each item, and don't hesitate to ask questions.
- Closings usually take place at a title company with your real estate agent, a closing agent, you and any co-borrower(s), and the seller's real estate agent. Be sure to bring all documentation related to your purchase including proof of homeowner's insurance and a copy of the purchase contract.
- In addition to the documents you bring, you'll have a handful of documents to review and sign when you arrive. It is your responsibility to fully understand the primary closing documents which you are legally committing to when you sign. These include a promissory note, a document indicating that you have accepted the mortgage loan from your lender and several affidavits and declarations, which are legally binding documents that spell out your financial obligations and rights as a homeowner.
- Be prepared to pay things like any outstanding escrow items or closing costs that aren't rolled into the loan – usually by cashier's check or wire transfer.
- When everything is signed and completed, you'll receive the keys to your new home!
It's important to understand the closing process so that when your settlement date arrives, you're prepared. While it may seem daunting, it will go much smoother if you take your time and have a trusted team with you to answer your questions.
For more information on the homebuying process, be sure to follow our spring homebuying series.