Closing on a home – Often called a “settlement,” you, the lender, and the sellers simultaneously exchange all documents and funds required to complete the transaction. As a buyer, you will sign a stack of legal documents related to the transfer of property ownership, pay closing costs, fees, and the initial escrow of your homeowner’s insurance and property taxes.
Where does it take place? – If you are getting a mortgage, the closing usually takes place at the office of a settlement company. It can be the title company (the company that insures your ownership of the property) or one of the attorneys’ offices.
Who attends? – In general, attendings include you, your agent, the seller, the seller’s agent, and attorneys for the buyer, seller, and bank.
How do I prepare? – The lender will send you a closing disclosure at least three days before your closing date. This document will include the terms of your loan and the estimated closing costs you owe. You will not know your final numbers until right before closing (the afternoon beforehand, usually) If you owe money at closing, make sure you plan ahead to get a cashier’s check or have a wire transfer done. Personal checks are not accepted for purchase but bring your checkbook in case there are minor adjustments that require you to pay an additional small amount.
What do I need to bring? – On the day of closing make sure you bring the following.
The closing disclosure.
Your cashier’s check or proof of wire transfer.
Your driver’s license or another legal form of ID.
Any documents your lender requires.
Your co-borrower, if applicable.
Your checkbook for minor adjustments in numbers.
What am I signing? – At closing you will sign a lot of documents which vary depending on location and type of home you are buying, but you can expect the following.
A promissory note, which outlines the terms of your loan and promises you will pay back what you are borrowing.
A “Truth in Lending” statement, which details the amount of your loan over its lifetime, plus your interest and annual percentage rates.
A monthly payment letter, which breaks down your monthly mortgage payment by principal, taxes, interest, insurance, etc.
The closing disclosure, which should match the one you received three days ago from your lender.
Title or warranty deed, which transfers ownership of the home.
Proration papers, which dictate how costs such as property taxes and utilities are being prorated for the month of purchase.
Statement of identity for the title company to differentiate you from anyone else with the same or similar name.
Declaration report, which states you have seen all the inspection reports done to the property.
Abstract of title, which includes all the documents related to the title of the property. For older homes, this can be quite thick.
After everything is signed and transferred some of the final documents, including the deed and mortgage or deed of trust, are delivered to the county recorder to be recorded and you are a new home owner!