What to Expect at Closing

Author: Alecia Pirulis  

people in office

Should you schedule the closing the same day you plan to move? If you are selling a home and purchasing a new one, should the closings be on the same day? What should you bring to the closing? Are all of those forms really necessary, and what do they all mean?

You’ve been waiting for this day for weeks – possibly even months. Finally, it’s time to close. If you’ve never been through a closing before, it can be an overwhelming experience. Here’s what you need to know about closing on your home:

First – shop around! There is no set rate for closing costs – they not only vary, but they are negotiable. You can save money by getting estimates from a variety of settlement services. You may also want to shop for additional loan offers – contrary to what many believe, it won’t hurt your credit score to fill out several applications.

Be aware that while it may seem like the most convenient way to do things, having the closing the day you plan to move can make for an exhausting day – double if you plan to close on two homes on the same day (the one you’re selling and the one you’re buying). If you must schedule closings on moving day, schedule them as early as possible in the morning. You don’t want to be in the middle of loading the moving truck and have to stop to head to the closing.

If you are selling one home and purchasing another and you’ll need the cash from the sale of your home to pay for your new home, be sure you schedule the closing on the house you are selling first. Once you’ve closed on your home that you are selling, you’ll need a certified check to bring to your purchase closing.

Be sure to schedule plenty of time for closing – this isn’t something that can be done on your lunch hour. While it should be a fairly smooth process, problems do arise and you don’t want to be rushed.

Be sure to read all of the documents ahead of time so you are prepared before the actual closing. Yes, they are a little dry, but that’s okay – get yourself a cup of coffee and make sure you understand everything. If you have questions, be sure to take note of them.

There are certain items you’ll need to bring to closing. As the seller, you’ll need to bring the keys to the house, the garage door opener remote, the neighborhood association covenant and restrictions (if applicable), and anything the buyer might find useful (manuals for appliances, receipts for work done, etc.).

As the buyer, you’ll need money – a cashier’s check for closing costs and any remaining payment. Both parties (buyer and seller) should have a valid photo ID. Other items required vary by state. You may need copies of your homeowner’s insurance policy and other required policies. The closing agent should call you before the closing to let you know exactly what you need. If you have questions, ask. You don’t want to show up on closing day without a necessary item.

When you walk into the closing, you’ll be greeted by a professional settlement agent, the other party involved (buyer or seller), and perhaps the respective real estate agents. The settlement agent is in charge of the closing – he or she is the one who will file all of the documents and make sure the taxes are paid. The settlement agent also makes sure everything is done within the time frame set by law.

You should already have a Good Faith Estimate, or GFE, from your loan lender. This document explains the loan costs so there shouldn’t be any surprises. You should also have a booklet entitled, “Buying Your Home.” If you don’t, be sure to contact your lender – these should be provided to you within three days of your loan application.

So, what papers can you expect at the closing? You’ll be signing several documents – at times it may feel endless. If you’ve reviewed them ahead of time, then you will know what to expect. If you had questions or didn’t understand some of the terminology, ask before you start signing. It is perfectly acceptable to have your lawyer review the documents with you or even attend the closing, if it makes you more comfortable.

You’ll be signing a Mortgage Note, a document concerning your loan and your promise to pay the loan. Another paper you’ll sign is called the Deed of Trust. This paper acknowledges your debt and gives the lender the right to foreclose on the property if you fail to pay the mortgage according to the set terms.

Next, you’ll sign the Truth-in-Lending Disclosure, which states any changes to the terms of the mortgage loan since you initially applied for the loan. The HUD-1 Statement will list all of the details of your mortgage loan, including the actual settlement charges and the difference between your GFE and the actual costs charged at closing.

You’ll also sign something called Affidavits and Declarations. These are simply statements you are declaring to be true – for example, that the property you are purchasing will be your primary residence.

After signing all of the above documents, you’re done! You’ll take the keys and be on your way. There are a few other housekeeping items the settlement agent will be handling after the sale, but your part in the home buying (and/or selling) is over. Congratulations!