Closing Your Transaction

What to expect on closing day

Things You Should Be Aware of on Closing Day

Closing on a home purchase/sale transaction – What to Expect


As a buyer, from the moment you receive an accepted offer on a home, everything builds towards the day when the property officially changes ownership. Closing on the home is the grand finale of the entire buying process. With all the anticipation, it’s normal to have questions pertaining to who, what, when, where and why. Here’s what you can expect and how best to prepare.


Who Will Be Present at Closing?

First off, you will be in good company at the closing table. It’s a time when many of the major players involved in your transaction all convene together. You can expect to see the following people (not all may be there):

Closing Agent

The agent’s role is to prepare all the closing documents for the transaction. This person conducts the meeting and oversees the signing and recording of the documents. In addition, the closing agent collects the payments required to settle the transaction, including escrow deposits, down payment funds and bank fees, and then confirms the funds are properly distributed. The closing agent could work for the lender or the title company and might also be an attorney or could be an independent escrow company.

Real Estate Agents

While not necessary, it can be helpful to have your real estate agent present during the meeting. Your real estate agent should know your deal inside and out and can help to provide guidance should any issues or errors come up. The home seller’s real estate agent may be present as well.

Attorney

If your deal was particularly complex, you may have hired a real estate attorney to provide counsel throughout the transaction. Some states even require an attorney to facilitate the closing. Both the buyer and seller are allowed to have personal representation at the closing table.

Title Company Representative

During the transaction, the title company performs a search on the property and provides written evidence that the title is legitimate. A representative from the title company may also attend the closing.

Loan Officer

Financing is a very important part of a real estate transaction and it’s not uncommon for your loan officer to stop by the closing to ensure everything goes smoothly.

Home Seller

If you’re the Buyer and the plan is to exchange paperwork at the same time as the seller, you may get a chance to meet face-to-face.

  • What Happens at a Closing?

    What Happens at a Closing?

    The closing, also referred to as the “Settlement,” involves the simultaneous exchange of documents and funds required to complete the transaction.


    If you are the Buyer: It’s best to prepare for the meeting; start exercising your writing hand and bring your favorite pen. You will be signing a variety of legal documents related to the real estate agreement and your mortgage loan. In addition, you will be providing payment for any remaining balance related to purchasing the home.

If you are the Buyer: The giant stack of paperwork waiting for you at the table will likely include the following:
  • Closing disclosure: Summarizes the buyer’s and seller’s closing costs, separately itemized.
  • Warranty deed/title: Guarantees the buyer a clear title to the property.
  • Pro-ration document: Breaks down how property taxes and other dues (such as HOA fees) are being divided up between the buyer and seller.
  • Statement of identity: Helps the title company identify you and separate you from other people with the same or a similar name.
  • Abstract of title: Lists all of the recorded documents and proceedings related to the property, such as surveys, easements or liens.
  • Truth in lending statement: Details information pertaining to your loan, including the amount borrowed, your interest rate and any other pertinent terms.
  • Promissory note: States your promise to pay back your loan. It is essentially an IOU.
  • Mortgage/Deed of trust: Pledges the property as security for the loan.
  • Monthly payment letter: Outlines your monthly payment amount, when the payment is due and where to send the money.

  • When is Closing Day?

    When is Closing Day?

    It may feel like a lifetime ago, but the date of closing was likely set during the negotiation phase. In a financed transaction, you can expect the closing to take place at least 30 days after acceptance of the initial offer, which provides enough time to secure a mortgage. For cash buyers, closings can take place much faster.

  • Where Will the Meeting Take Place?

    Where Will the Meeting Take Place?

    Closing procedures vary from state to state and even county to county. In some areas, it’s common to convene at the closing agent’s office or the office of the title company. Other times you can meet at the local registry of deeds, your attorney’s office or even your neighborhood coffee shop.

  • Why is All of This Necessary?

    Why is All of This Necessary?

    If you’re the Buyer: Before you can celebrate with a bottle of champagne or get the keys to your new home, you will need to get all of these formalities out of the way. Buying a home is a big undertaking and the closing process ensures that all of the i's are dotted and t's are crossed. After all, the closing is the final performance of all the agreements you made between the home seller and your lender. It may seem like a lot of work, but rest assured, the actual meeting can be completed within a couple of hours.

How to Prepare for Closing Day

Prior to finalizing the transaction, there are a few things that you can do to get ready:


  • Read through your contracts: Re-familiarize yourself with any specific items that were negotiated. These can include any repair agreements or credits that were formalized during various stages of the purchase.
  • If you’re the Buyer: Schedule a final walk-through: You will want to do one last look around the property to ensure the house is being left in the condition you were expecting when you first saw it.
  • Get your funds organized: You will likely be asked to bring a cashier’s check to the meeting or wire the funds in advance. To avoid scrambling the morning of closing, you may want to discuss your options with the bank or mortgage broker and make sure everything is ready to go!
  • Don’t forget your I.D.: Before you can get started with signing of the documents process, the closing agent will need to check to see you are who you say you are. Be sure to bring a Government-issued photo I.D. such as a Driver’s license.

Closing Disclosure – 3 Day Rule

Three business days before you close, your lender will supply you with a Closing Disclosure (CD).

Be sure to read it carefully and compare it to your Loan Estimate (LE). The main points to double-check for accuracy are:

  • Borrower names
  • Borrower addresses
  • Interest rate
  • Loan amount
  • Loan type
  • Loan terms
  • Seller concessions
  • Closing costs
  • Cash to close

Closing Day Checklist

On the big day, take your time to get ready and follow these tips:

  • Know where you’re going for closing
  • If it’s a mobile closing, confirm the appointment
  • Make sure all borrowers bring their ID’s
  • You may need to bring proof of homeowners insurance
  • Bring anything else your closing agent told you that is required
  • Arrive in plenty of time
  • Bring your Closing Disclosure to confirm the numbers

How long does closing day take?

The closing generally takes anywhere from 1.5 to 2 hours – That is as long as everything goes smoothly.

 

Keep in mind that even under the best of circumstances, errors can occur. Various people are involved in the transaction. These include buyers, sellers, real estate agents (for buyer and seller), mortgage broker, mortgage lender, title and escrow company, and possibly a real estate attorney. If any one of these people drops the ball or makes a mistake, it can jeopardize the closing schedule.

 

Here are some of the most common things that can go wrong at a closing.

 

  • Inaccurate Closing Disclosure
  • Loan document errors and misspellings
  • Loan documents do not arrive on time
  • Unknown liens on the title
  • Problems with the final walkthrough
  • Seller or buyer passes away
  • There’s a natural disaster
  • The buyer forgot to provide the closing funds to escrow
  • The buyer provided insufficient closing funds to escrow
  • The buyer provided the closing funds late
  • Wire fraud occurs, and closing funds are lost


This why it is vital to work with a lender, realtor, and closing agent that you can trust and have a good reputation.

Wire Fraud Cautions
One of the most common frauds taking place is wire fraud for mortgage closings. Here’s what happens, criminals hack into the email of title and escrow companies and law offices. Right before closing, they email the borrower and tell them there’s been a change of plans for where they need to send the money. If the borrower follows the hacker’s instructions, their money is gone, and nothing can be done about it.

If you’re wiring funds, get the email instructions several days before closing from your lender. Call whoever is doing the closing and confirm the instructions. Make sure you’re calling the number your lender supplied. Then, when you go to wire the funds, call that same number again and confirm. Once you’ve wired the funds, call again and confirm they’ve received the wire.

You need to be on top of this — otherwise, you could lose thousands of dollars. Never change where you’re going to wire the funds based on an email. And don’t call the phone number on an email with a different set of instructions. No matter what, always be in close phone contact with your lender and closing agent.