You’ve put an offer on a home and it will soon be yours – all you have to do is get through the closing.
The closing is an important formality, and the last step to making everything legal. It’s during this time that you finally commit to your new mortgage (if you got a mortgage), and you get the keys to your house.
Preparing for your closing ahead of time can give you confidence as a mortgage borrower and homeowner.
The Consumer Financial Protection Bureau (CFPB) says that the top mistakes to avoid at a closing include:
- Rushing – Take all the time you need.
- Trying to make someone else happy – You are going to be the person responsible for the mortgage every month. The only person to make happy is you.
- Feeling like you should know the answer to something – Ask questions if you don’t know something. Ask as many questions as it takes to understand the situation. Mortgages are not simple, and the paperwork at a closing can be tedious.
- Pushing aside that voice inside – If you feel something is wrong or out of place, it probably is. Trust that voice and say something.
What you need to bring to a closing
The first thing to bring is your patience. It does take some time, and you will be going over lots of papers and signing a lot of things. The meeting can take 45 minutes to an hour, says Anne Morris Bohn. But some closings can drag on even longer.
Bohn has presided over thousands of home closings because she is a real estate closing attorney for Grace Chun & Associates, LLC, in Atlanta. As a closing attorney in Georgia, she represents the lender in closings that involve a loan.
Title companies in other states are typically working on behalf of the lender as well. The closing agent, though, is usually neutral between buyer and seller, she explains.
“For first-time homebuyers, they usually are worried about how much money they have to bring to the closing because money is very tight,” she says.
But with an experienced real estate agent and lender, buyers should know what they will be paying during their closing. By law, you must receive your Closing Disclosure document three business days before your closing. This eliminates a lot of past problems where people would get blindsided by some document or bill at the closing that they had never seen before.
Reading over all those documents before the closing can save you time and problems. Check that all your personal information is correct on each and every sheet. Double check to see that the loan amount, monthly payment and interest show the same numbers on all the documents.
“There are between 70-125 pages to sign,” Morris Bohn explains.
Also don’t forget to bring your government-issued photo I.D., such as your driver’s license, with you along with that certified or cashier’s check for the closing costs – unless your state requires that the money be wired. Your closing agent and lender can let you know exactly what you need.
Confirm with your real estate agent and lender where the closing will be taking place and write down the exact address and phone number of someone to call in case something happens. Closings usually take place at the office of the lender, real estate attorney or title company.
Who attends a closing
The majority of closings are still done with the parties coming together to go over the documents together and giving their physical signature on papers.
In some areas of the U.S., the buyer and seller sit down together at closing. In other places, they will never meet.
The person leading a closing is usually a title officer, an escrow company officer or an attorney. It’s important to note that the closing agent is neutral to the parties selling and buying a residence.
The buyer and seller agree on a closing officer when they sign the offer on the home. In addition to the closing agent, you might want to ask your real estate agent or an attorney to come along, especially if you are nervous about the situation.
In a few states, an attorney must be present at closing. Every state is different with requirements of who is there and who is handling the meeting.
“What I’ve noticed is that the buyer and seller are often similar. What appeals to one person in a certain situation appeals to many just like them,” Morris Bohn adds.
Sometimes when the parties don’t like each other or have had problems along the way, they will do a separate closing for each.
“They come in at different times, and each party finalizes their signing of the papers,” Morris Bohn says.
What papers you need to sign
Morris Bohn says that some of the most important papers you’ll go over and sign your initials or full signature to include:
- Loan Estimate and Closing Disclosure – This is an itemized list of all the charges and credits. It helps spell out the loan transaction so it’s easier to understand.
- Promissory Note – This is your “promise” to pay the lender the right amount on the right date every month.
- Mortgage or Deed of Trust –You agree that the lender puts a lien on your new home as security in case you default on the loan.
- Loan Application – This is an updated version of a document you’ve already signed, and if anything has changed from your original application such as taking on another debt, you have to reveal that to the lender before signing.
- The Deed – This states the transfer of ownership from the seller to the buyer.
When the closing is finally over, you’ll get the keys to your new house, along with a big packet of signed papers. After that, you’re the proud new owner of a home