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If you're a first-time home buyer about to close on a house, congratulations are in order. You've come a long way through the home-buying process. Home ownership is so close you can probably almost taste it. But before you get to cross the threshold of your new home, there's one final step you have to go through before you get your keys: It's time to close.
Closing is the last item on your home buyer checklist. In a real estate closing, ownership of the property is legally transferred to you. This is the day that you sign all the paperwork to make the deal official.
The time it takes to close on residential real estate varies but may take anywhere from four to six weeks.
If you're paying cash, the transaction might go faster. If you have secured a loan, mortgage lenders need to make sure several requirements are met before handing the money over to the seller.
Everyone wants the closing to happen. You want the home. The seller wants the money. The lender wants to close the mortgage loan. The title company and real estate agents want to get paid. That's a lot of motivation, but it doesn't mean delays won't happen during the closing process.
A few examples of possible delays include:
Here are some of the things that need to happen to close a typical home purchase:
Some steps are out of your control and largely invisible to the buyer. For example, the lender will pay a title company to perform a title search. The title search tells the mortgage lender that no one else has a right to claim ownership of the property you are buying.
It's not all that common to back out of a mortgage loan before closing, but should you need to do so our guide can help you navigate that process.
These days, you're likely to provide most documents digitally before your closing date. Your loan officer should supply you with a list of what you need to bring with you on closing day. It's a good idea to bring your phone, tablet, or computer so that you can access your email and the lender's loan portal, in case the lender is missing anything you previously submitted.
In addition, make sure to bring:
Closing costs are just one of the many expenses of home ownership. They usually amount to 2% to 5% of the loan amount, though not every home buyer will have to pay them out of pocket on closing day. You might have to pay some fees, such as the appraisal fee or the credit report fee, but whether you pay anything on your closing date depends on the specifics of your loan.
Here are some common scenarios:
Closing costs typically include:
Other line items can affect the amount of cash needed to close. For example, if your mortgage lender will pay your property taxes and homeowner's insurance premiums, you will need to fund an escrow account for those expenses. At closing, these are called prepaids.
Prepaids and all other closing costs are noted on your loan estimate that lenders must give to you after you submit your loan application. Some of the actual costs may increase at closing, but by law, others can't.
You will sign a mountain of documents at your closing. Take your time and look carefully at each page. These are legally binding documents. You have the right to read and understand each and every one of them, and to make sure they are error-free.
A notary public will be there to check your identification. They may take a photo of it and may require your fingerprint.
Once the purchase transaction is funded (by the loan proceeds and your down payment), a closing agent disburses payments to all parties.
Most buyers get the keys to the home on closing day (unless you and the seller have agreed to something different in the purchase contract). Find out from the closing agent if there are any additional steps you need to take after closing in order to take possession of the home.
Once the closing process is completed, there's nothing left for you to do but enjoy your new home!
At a closing, you'll sign legal documents related to the mortgage and pay any required fees. The closing agent will collect your down payment and the loan funds in order to pay the seller and any other parties. The closing agent will prepare a new deed to the property, naming you and any co-owners. Most buyers leave the closing with the keys to the home they just bought.
You should bring a government-issued photo identification and a second form of ID for each person who will be named on the mortgage. Also, bring a copy of your purchase agreement, loan estimate, and closing disclosure so that you can make sure the loan documents you sign are in agreement. Lastly, bring a cashier's check for any closing costs that are not rolled into the loan. Your lender will give you a dollar figure.
The time it takes to close on a house after your offer is accepted is typically four to six weeks. On closing day, the closing appointment shouldn't take more than an hour or two.
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