Understanding the Closing Process

Closing on your home is the exciting final chapter of your homebuying journey. Here’s a helpful overview of what to expect, so you’re well-prepared in advance.

Closing Document Preparation
Once the loan has been cleared to close, the lender will work with the title company to prepare the closing documents. This typically does not involve any action on the part of the buyer.

Receiving and Reviewing Closing Documents
As one of the last steps before closing, the title company or escrow agent typically will send the buyer a formal notice confirming the date, time, location and participants in the closing. It also will specify that the buyer must bring the following to closing: 

• Government-issued photo ID (driver’s license or passport)
• Payment for the down payment and closing costs (such as a wire transfer, or a cashier’s or certified check)

The title company or escrow agent also will provide the buyer a Closing Disclosure document that details all the final closing costs, tax and insurance costs, and a detailed breakdown of the mortgage costs. It’s crucial for buyers to carefully review this document in advance, in order to seek clarification or make corrections if needed.

Closing Day
Most buyers do a final walk-through of their soon-to-be new home with their real estate agent within 24 hours of closing day. If there are any problems, the buyer’s real estate agent will work with the seller’s agent to resolve the issues before closing.

And at long last, closing day arrives. At closing, the buyers and sellers sign numerous closing documents in the presence of their real estate agents, and are guided through the process by a title or escrow agent.

Key documents that buyers sign at closing include:

• The promissory note, which specifies the buyer’s loan total, interest rate, term of the loan, payment dates, and forms of payment.
• The deed of trust, which indicates the buyer’s rights and obligations, along with details indicated in the promissory note.
• The payment letter or escrow disclosure, which details the specific charges the buyer will pay into escrow each month as part of a mortgage agreement, as well as the amounts of each escrow item, including property taxes, homeowners insurance, and, if applicable, private mortgage insurance.

After all the documents are signed, it’s official: the buyer is now a proud homeowner! With keys in hand, they can begin their new life in their nice new dream home.