You’ve made it through the open houses, the showing round robins, the competing offers, the inspections, the negotiations, and all the nail biting and here you are, ready for closing day. If everything goes smoothly, it’s a small formality: everyone signs and initials, you hand over your carefully saved money, shake hands, and leave with the key to your brand new home.
It’s exciting, it’s nerve-wracking, and it can feel overwhelming, but it doesn’t have to be. Knowing what to expect is a big part of making sure that everything does go smoothly.
Review your documents before closing day
By law, you’re entitled to receive your closing disclosure three days before your closing. This big document should be formatted exactly the same as your loan estimate, and it details both your closing costs and the seller’s closing costs. Make sure to carefully compare and review it prior to your closing.
Do your final walk-through
As a buyer, you’re usually entitled to do a final walk-through 24 hours prior to closing. What are you looking for? You’re making sure that the seller has vacated the property, and also that the home is in the same condition you’ve agreed upon in your contract. That means that if you and the seller agreed to make some repairs following your home inspection, double-checking to make sure those repairs were actually made.
Know who will be there
Typically, your neutral, third-party closing agent — a title officer, attorney, or escrow officer — will be there along with you, anyone else who is signing your loan and title with you, and your real estate agent. The closing will be run by your closing agent.
Make sure you have everything you need
You’ll need to be alert and you’ll need patience, but you must also have the following materials:
Cashier’s or certified check: Once you’ve reviewed your loan documents, you’ll know exactly what amount to bring, but you will need either a cashier’s or certified check made out to cover the down payment and any closing costs. Your closing agent will tell you who the check should be made out to, and if you’ll need one or two checks. It is an option to wire the funds, but wire transfers can also cause delays so if you are going to go this route, be prepared, and submit the transfer in advance.
Photo ID: Part of the closing process is to verify that you are yourself. Bring a current government-issued ID, such as a driver’s license or a passport. Make sure your ID matches the name on your title and mortgage.
Proof of insurance: Your closing agent will also be verifying that you have insurance that is both active on the closing day and paid for through one year.
Final purchase and sales contract: You’re also verifying that the information in your closing documents is the same as what has been provided to you, so bring these items just in case you need to double check.
What are you signing?
You’ll be closing on both your loan and your home purchase, so be prepared for quite a few documents. These can vary based on your home and loan specifics, but you can expect some combination of the following:
Promissory note: This is a promise to pay back the loan amount, and outlines your loan terms.
Truth in lending statement: This is also known as Regulation Z, which you receive before you sign your mortgage contract. It details your interest rate, your annual percentage rate, the amount of the loan and the total cost of your loan.
Mortgage: When you sign this, your lender puts a lien on your new property, and you have put up your new home as security for the money you owe on it.
Monthly payment letter: This breaks down the details of your monthly mortgage payment to show how your principal, interest, taxes, and insurance all add up to the total payment
Title: This is the piece of paper that legally describes the property you’re buying, and officially transfers the title from the seller to you, the buyer
Proration papers: These papers explain how you’re divvying up costs like property taxes, interests, homeowner association dues, utility bills, etc. for the month you’re closing in.
Statement of Information: This is also known as a statement of identity, and is used by your title company to properly verify you and avoid confusion between you and anyone else with a similar name.
Declaration of Reports: When you sign this, you’re acknowledging that, as the buyer, you have both seen and signed off on the inspection reports that have been done on the home you’re buying.
Abstract of Title: This document is a list of all of the recorded documents that affect the title.
Be prepared for delays
Because humans are humans, mistakes can and do happen, and something as small as a typo can hold up a closing. If that happens, whether the interest rate is off or your name is printed wrong, your loan documents may be sent back to your lender in order to correct the mistake — which can delay your closing.
It’s always best to be prepared for these types of scenarios, just in case, as much as you hope they don’t happen. Try to schedule your closing earlier in the day, versus at the end of the day, and most of all, don’t wait to schedule your closing until the last day on your contract.
Take the entire day off
If there are delays, it may not be sufficient to try to only take your lunch break to close. This is a big day! Take the entire day off in case anything happens, and if it doesn’t, well, you just got the key to your new house!