What happens at the time of closing is a whole new experience if you’re a first-time buyer. But one you should look forward to with anticipation. Closing is when it’s finally time to complete the paperwork on your new home and become the legal owner.
To help make the steps for closing on a home clearer, we’ve put together a list of common questions about closing and a guide to what typical closing costs you’ll have to pay.
1. What is the closing process?
The settlement or closing process is the final step to purchasing a home. Closing is when all the terms of the sale and purchase agreement are met, closing costs paid and the home title is legally transferred to the new owner.
2. Where does closing take place?
Typically a date is set for closing, and you, the owner, and your respective agents turn up at a specified location. This can be the office of a lender, escrow company, settlement attorney or the title company; it differs from state to state. A settlement attorney oversees the process to make sure all the closing services are completed.
If you are unable to attend the scheduled closing day appointment, then you may be able to pre-sign your documents or use a power of attorney.
3. What do I need to bring with me to closing?
You should bring with you:
- government-issued photo identification, such as driver’s license, or passport
- your spouse or partner if you’re buying together and their ID
- your checkbook, a cashier’s check or documentation of the online funds transfer
- proof of homeowner insurance
Be ready to sign a lot of documents, these include:
- real estate transfer documents, such as the deed to the house,
- home loan documents, such as the mortgage note and the closing disclosure form.
4. How long does closing take?
Expect the closing process to take 1 to 2 hours. It may be quicker if the settlement agent uses electronic signatures, and doesn’t require everyone to be at the table. It’s a good idea to request the documents so you can review them beforehand, so you’re familiar with what it is you’re signing.
If you don’t understand something, you can ask your agent, but a brief explanation is usually given before signing on settlement day.
5. Are funds required at closing?
Yes, you will need to pay your down payment and various other closing costs. You’ll need to bring with your checkbook or a cashier’s check. You should be able to find out the exact amount a day or two before closing. The funds can also be transferred electronically on the day.
6. What exactly are the costs I can expect to pay at closing?
You should expect to pay approximately 2 to 5 percent of the purchase price of your home in closing costs. These can include but are not limited to:
- Closing fee
- Property tax
- Homeowners Association
- Transfer fees
- Homeowners’ Insurance
- Title fee
- Lender’s Policy Title Insurance
- Mortgage application fee
- Transfer taxes
7. When do I get the keys to my new house?
Typically after signing the documents and paying closing costs, the buyer gets the keys to their new home. Be aware that you may have to wait a few more days until the county officially records the new title. Be patient; you will get the keys!
Sometimes it’s the lender who can hold things up, so to ensure that there are no delays with your closing process, make sure you supply all the required documentation. Having to chase you up for additional paperwork can draw out the closing process, something that no one wants when purchasing a home.