What Happens on Closing Day?

November 7, 2021by Brian Walsh

After touring homes, making an offer on your dream property, and securing financing, it may feel like your work is done.

And while you’re certainly on the path to homeownership, you still need to lock down a few details. Closing on a house is the final step in your transaction—which means you’ll want to know exactly what to expect on closing day.

This article will break down what takes place on closing day, and outline how you can prepare for this major milestone.

What To

Expect At The
Real Estate Closing

Also known as a settlement, the real estate closing marks the transfer of property from the seller to the homebuyer.

At closing, all remaining documents are signed by the buyer and seller, the deed is transferred to the new property owner, and outstanding payments are made. An escrow agent typically oversees this process and prepares the documents that need to be signed.

A crucial detail: In addition to covering the remaining balance for the property sale, the buyer will also be responsible for some closing costs (unless the seller agreed to cover them when accepting the buyer’s offer).

Generally, closing costs are about 3-4% of the purchase price. Although they do vary significantly by state. No matter your location, it’s important to note that closing costs are usually several thousands of dollars.

How much will your closing costs be? The buyer will know the specific amount they’re responsible for several days before closing, when the lender submits a closing disclosure outlining the loan terms and exact cost of all closing expenses. Closing costs typically include loan origination, underwriting, appraisal, title search, and credit report fees.

From there, most closings will include the following steps:

  • The buyer pays all closing costs.
  • The seller transfers ownership of the property by signing the title over to the buyer.
  • The escrow agent registers the new deed with the relevant county office in the buyer’s name. This officially marks the transfer of ownership.
  • The seller receives their proceeds from the home sale (excluding any outstanding mortgage balance, closing costs, and agent fees).

A reminder that there are numerous documents both parties will have to sign on closing day. These include the bill of sale, the property deed, the closing disclosure, the mortgage note, and the loan application.

Buyers and sellers should each expect to sign their names at least a dozen times during the settle agreement. They will also need to bring government-issued identification such as a driver’s license or passport.

Where and When

Will The Real
Estate Closing Occur?

During contract negotiations, buyers and sellers agree on an anticipated closing date. This estimated closing date is usually only an approximation, so all the relevant parties can later come to an agreement and find a time that works for everyone.

In 2020 the average time to close on a home purchase was 47 days (or 44 days for refinanced properties) from the time the seller accepts the buyer’s offer. 40 to 60 days is typical, though delays may also occur if there are issues involving financing, the property appraisal, the home inspection, or the title search.

Buyers who are taking out a mortgage loan can expect their closing to take place at either the title company’s office, the lender’s office, or the escrow agent’s office. Those who are dissatisfied with the arrangements can make a request to change them.

Buyers who aren’t taking out a loan to complete their transaction can choose a mutually-agreeable location such as an attorney’s office. It’s important to note, though, that certain restrictions may delay the time it takes for an attorney to distribute the funds.

Who Will Be Present at Closing?

Curious about who will be by your side on closing day? The specifics may vary, but the homebuyer and seller can typically expect the following parties:

  • Closing agent 
  • Lender 
  • Title company representative
  • Attorneys (representing the buyer, seller, and/or the lender)
  • Seller’s real estate agent

The closing agent will oversee the meeting, make sure all the necessary documents are signed and recorded, and ensure all closing costs and escrow payments are properly disbursed.

How to

Prepare
For Closing Day

Preparing for closing can save stress on the actual day of your settlement. Buyers in particular should take the following steps to get ready for closing day:

Save money early on – A reminder that closing costs almost always total thousands of dollars. To avoid getting into a tough financial position—to keep from scrimping for money you don’t necessarily have on closing day—you’ll want to start saving from the time your offer is accepted. The sooner you start allocating money toward the transaction, the less anxiety you’ll experience.

Review the closing disclosure in detail – Lenders must provide homebuyers a closing disclosure no fewer than three business days before closing. This gives the parties time to prepare for closing day, review the disclosure, and compare the terms to those listed in the loan estimate. The line-item breakdown of all closing costs can help bring understanding and peace of mind.

Prepare a cashier’s check or wire transfer – Setting aside the funds you need to close on a home is essential. However, you’ll also want to make sure you’re going through the proper channels. Be sure to speak with your loan officer or escrow agent to determine the best payment method. Many buyers use a cashier’s check to cover their closing costs, while others prefer wire transfers.

Email all points of contact a week before closing day – Have questions about the closing process? Aim to ask them early on. If you’d like, you can reach out to your real estate agent, loan officer, escrow agent, or title company representative with questions a week in advance of closing day. Check and see if there’s anything they need from you so you can move seamlessly through the actual settlement agreement.

Request a formal walkthrough of the home – Many buyers like to request a formal walkthrough of the home they’re purchasing 24 hours before closing. This is key to a smooth experience on closing day, providing one last chance to make sure all the agreed-upon repairs have been made, that the home is in sound condition, and that the seller has vacated the property.

What Happens

After the Real
Estate Closing?

Grab your keys, because after your real estate closing, the home is yours!

That’s right. Once everything is signed, and the checks have been handed over (or the wire transfer completed), the property transaction is finalized. You can now take possession of your new home, and take care of any post-closing agreements if relevant.

If you aren’t aware of any reimbursements for real property taxes, or repairs that couldn’t be scheduled before closing, then you’re officially in the clear. Congratulations on your new home, and on navigating the intricacies of closing day.

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