Closing is the final step in the home-buying process. On closing day, the buyer officially becomes the legal owner of their new home. Before this day, you should know what to expect at closing.

The closing date is set during the contract negotiation phase of the sale and is actually listed on the Purchase Agreement. The average closing process takes about 45 days. You might wonder why it sometimes takes so long to go from offer acceptance to closing, even when earnest money has already exchanged hands, but there is a lot that happens between the Seller agreeing to an offer and the actual termination of the contract, or closing. Lenders and title agencies need time on their end to correctly complete their part of the deal and, depending on the situation, this can take weeks… or even months. 

Don’t worry if a delay or other hiccup occurs before closing. This happens to almost a third of home closing transactions. Most of these delays are due to finance issues, which we’ll discuss later. Let’s look at what to expect at closing, when you’re buying or selling a home.

Prepare Before Closing Day 

In the meantime, both parties can prepare for a smooth closing. Most contracts stipulate closing contingencies, like home inspections, appraisals, loan documents, and home owner’s insurance. Both parties must be ready to meet these contingencies before the transaction can go through.

A real estate agent, like any on the List With Elizabeth team, can help you with our network of professionals who can assist with finalizing all of these contract details. 

Loan documents are especially important if you are the Buyer and the sale isn’t an all-cash deal. Despite any pre-approval you may have secured for a loan, you’ll need to complete financing information before the deal can be finalized. A mortgage lender can help with all of the involved steps in this process so that closing won’t be held up for a financing issue, as previously mentioned. 

Closing Costs 

The Closing Disclosure, which you should receive a few days before closing will list all of the final terms, including closing costs and the details of who is contracted to pay them. This is one of the important things when figuring out what to expect at closing.

Closing costs are the fees third parties charge when you finalize the sale of a home. These can include the home inspection, homeowner’s insurance premiums, appraisal fees, credit report charges, attorney expenses, and agent commissions. Closing fees average anywhere from 2% to 5% of the purchase price of the home, so they could be substantial. It’s best to be prepared for this line item on the Closing Disclosure. 

Last Steps Before Closing 

Before you go into closing day, you should know what to expect at closing. There are plenty of things that might come up and these are the last few steps to expect.

There will also be a time for a final walk-through before closing. This usually happens less than 24 hours – or the day of closing. The walk-through isn’t a home inspection, but rather a time to make sure the home is in the condition agreed upon in your contract. All of the Seller’s belongings will be cleared out and this is the Buyer’s last chance to bring any last-minute issues to the closing table. 

What to Expect at Closing, The Actual Closing Day

On closing day, you’ll meet at the office of the escrow, likely the title company that secures ownership of the house. Each party will need to bring a photo ID, any outstanding documents or paperwork, and a certified or cashier’s check (made payable to the title or closing company) for any closing costs that are not being directly deducted from the sales price. 

On closing day, you’ll sign up to 100 pages of intensive paperwork. After going through the lengthy process of home buying, it could be tempting to rush through this final step. But it is important to read and understand each page and not be afraid to ask questions of your agent, or the title agency representative should any arise. 

First, the Seller will sign the documents to transfer property ownership. If they have already done this, and fulfilled all other terms of the sale from their end, they may not be required to be present in person at the closing, though most do choose to attend. 

Then the Buyer will take their turn to sign. These documents will include a Settlement Statement listing all of the costs related to the sale, a Mortgage Note contracting the Buyer’s promise to repay the loan, and a Mortgage Deed of trust securing the mortgage note. 

The title company will register the deed in the Buyer’s name and the title will be sent to the new owner within a few days. The keys, however, usually transfer hands immediately after the documents are signed.

That’s what to expect at closing when you buy or sell a home. Now that you’ve gone from contract to closing, you can begin the process of moving into your new home!