You’ve haggled over price and qualified for a mortgage, and now the only thing standing between you and your new home is the closing, where you’ll sign the paperwork finalizing the deal. What should buyers expect will happen there?
“The closing really should be a good experience for everyone,” says David McKey, a Louisiana real estate broker and National Association of Realtors regional vice president. “The buyer is usually excited about buying a new home, while the seller is excited because they’re selling their property and moving on.”
Here’s a rundown on what buyers (particularly first-time ones) should know about the closing process.
What are closings?
Closings are gatherings where buyers and sellers get together and sign all of the documents required to formally sell a home and transfer its title to the new owner. Unless the buyer is paying cash for the property, the closing is also where the purchaser will sign documents finalizing the mortgage that they’re taking out.
A closing agent hired by the buyer or the buyer’s mortgage lender or title-insurance company will usually run the proceedings and prepare all paperwork ahead of time. The agent, who’s often an attorney, will also typically move all of the money around (usually via wire transfers) and file signed documents with applicable government agencies once the closing concludes.
In addition to the closing agent, buyers and sellers will typically attend the session in person.
If the home’s title is currently in or will be in more than one person’s name (say, a husband and wife’s), all involved parties should plan on showing up. Both sides will also generally bring any real estate agents involved in the sale, and can also invite personal attorneys or other advisers.
What to expect
Closings generally take place in the office of either the closing agent, mortgage company or one of the real estate agents involved in the deal, or at your local registry of deeds.
McKey estimates that the typical closing takes around 30 to 60 minutes and involves signing “a stack of documents that probably looks a mile high if you’re a first-time home buyer.”
Kellye Curtis Clarke, a closing lawyer for suburban Washington, D.C., title company Hometown Title & Escrow, says purchasers should expect to OK a total of 50 to 100 pages of paperwork.
“The documents will vary from lender to lender, but usually include title forms, tax forms, affidavits, a deed of trust, a promissory note and a variety of disclosure forms,” says Clarke, who serves on the American Bar Association’s residential real-estate law committee.
She says good closing agents will explain each item before purchasers sign it, while federal law requires title firms to give buyers a key document called the HUD-1 Settlement Statement at least one day prior to the closing. Many agents also provide other paperwork in advance, while the mandatory lead time for sending HUD-1s will rise to three days as of Aug. 1, 2015.
How to prepare
Steve Dibert of MFI-Miami, a Florida consulting firm that helps attorneys challenge scam mortgages, recommends carefully reviewing all paperwork as soon as you get it.
“You want to make sure that the numbers all add up and that you’re getting what you were promised by the lender or broker who originated the loan,” he says.
Check all figures closely, especially those on the HUD-1’s last page. That compares the closing fees you’re actually paying with the written “Good Faith Estimate” that your lender provided when you first applied for the loan.
What to bring
All buyers whose names will appear on the property’s title and/or mortgage documents should bring government-issued photo identification.
You’ll also need a cashier’s check (or use a wire transfer) to submit any down payment that you’re making or fees that you’re not rolling into your mortgage. (Your lender will transmit its share of the purchase price directly to the closing agent.)
The closing agent or your real estate broker should be able to give you an exact dollar amount for your cashier’s check at least one day prior to the closing. You should also bring your regular checkbook just in case there are any really last-minute changes due to typos in the documents.