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The Closing

What to expect on the Big Day

It took many weeks to get there, but you've made it to closing day and soon you'll be a homeowner! Here's how closings typically work.

The Location

Through your realtors, you and the seller will agree on where the closing will take place. Typically, you'll meet at the office of either your attorney or the seller's attorney.

The People

Among the people you may see around the table are:

  • Your attorney
  • The seller and his/her attorney
  • The realtors involved in the transaction
  • The builder's representative (if you're buying a new-construction home)
  • Your loan officer
  • A closing agent (representing the title company-this may be one of the attorneys present)

The Action

Over the course of approximately an hour or so, you, the seller, and your lender will perform all the tasks required to legally transfer ownership of the property you're buying:

  • You'll review and sign all loan documents.
  • You'll give proof that you have secured required homeowner's insurance.
  • You'll provide a certified or cashier's check to cover your down payment (minus any deposits) and closing costs.
  • Your lender will disburse payment for the home loan amount to the closing agent. (Your lender will put a lien on the title until you pay your mortgage in full or sell your home.)
  • You and your lender will set up an escrow account if you are paying your property taxes and/or homeowners insurance in your monthly mortgage payment.
  • You will receive the keys to your new home!

The Paperwork

At the closing, you'll review, sign, and/or initial the following documents:

  • HUD-1 Settlement Statement. The final listing of your closing costs.
  • Deed of Trust or Mortgage. Documentation of the lender's lien on your property. Simply, you are agreeing to place the property as security in the event you default on your loan.
  • Promissory Note. Your "IOU" to your lender. By signing, you agree to make your mortgage payments in full, on time, and in accordance with all terms of your mortgage.
  • Interest, Taxes, and Insurance. Expect to write one more check to cover the following:
    • Prepaid interest. This is interest that accrues between your closing day and the date your first mortgage payment is due.
    • Prorated property taxes.
    • Prorated homeowner's insurance.