Closing a home purchase is the final step in the process of buying a home, and it involves several important steps. Here’s what a homebuyer can expect during this stage:
1. Review and Sign Documents
You’ll be presented with a number of legal documents to sign, including:
- Closing Disclosure (CD): This outlines the final terms of your loan, including the interest rate, monthly payment, and closing costs.
- Mortgage Agreement: If you’re financing the purchase, you’ll sign this document agreeing to repay the loan.
- Title and Ownership Documents: You’ll sign documents that legally transfer ownership of the property from the seller to you.
- Deed of Trust or Mortgage: If you’re using a mortgage, you’ll sign a document giving the lender a legal interest in the property until the loan is repaid.
Be sure to review all documents carefully and ask your attorney (or your agent) if anything is unclear. You may also have the option to review these documents ahead of time to avoid surprises.
2. Final Walkthrough
Before you sign the closing documents, you’ll typically do a final walkthrough of the home. This gives you a chance to ensure:
- The property is in the agreed-upon condition (e.g., repairs made, items included in the contract are still there).
- No damage occurred after the inspection and before closing.
- The seller has removed all personal belongings (unless agreed otherwise).
3. Paying Closing Costs and Down Payment
At closing, you’ll need to pay the remaining portion of the down payment and any closing costs. These fees can include:
- Down payment: The portion of the home’s purchase price that you pay upfront.
- Closing costs: These can include lender fees, appraisal fees, title insurance, escrow fees, and other costs associated with the purchase. These typically range from 2% to 5% of the purchase price.
The exact amount you need to bring will be listed on your Closing Disclosure. You may need to bring a certified check or wire transfer the funds.
4. Paying the First Month’s Mortgage
Depending on your lender, you may need to pay your first mortgage payment 30 days from the close date. Alternatively, some lenders may collect the payment during your first month of ownership.
5. Title Transfer
The seller will sign the deed transferring ownership of the property to you. This document is then recorded with the county, making you the official owner. Title insurance (if you’ve purchased it) will protect you against any issues with the title that arise after you take possession of the property.
6. Escrow Account Setup
If your loan includes an escrow account (used to pay property taxes and insurance), you may need to contribute funds to it at closing. The lender will use this account to pay future property taxes and insurance premiums on your behalf.
7. Receive Keys & Documents
Once everything is signed, payments are made, and documents are filed, you’ll receive the keys to your new home. You’ll also typically receive:
- Copies of all documents you signed.
- The deed showing that you’re the official owner.
- Any other records related to your mortgage and the home purchase.
8. Post-Closing
After closing, you can begin the process of moving into your new home. You’ll want to make sure to:
- Change the locks for security reasons.
- Contact utilities to set up or transfer services in your name (electric, water, internet, etc.).
- File for homestead exemptions (if applicable).
Common Timeline:
- Pre-closing: Finalize financing and inspection, conduct the final walkthrough.
- Day of Closing: Sign documents, pay your down payment and closing costs, get the keys.
- Post-closing: You are officially the homeowner, and everything is filed.
Things to Keep in Mind:
- Expect Some Waiting: Closing can sometimes take several hours, as documents are reviewed and signed.
- Bring Proper ID & Documents: You’ll need your ID, proof of funds for the down payment, and any documents required by your lender.
- Be Ready for Unexpected Costs: Sometimes, small fees might pop up at the last minute, so it’s good to have a little extra money available just in case.
Once you’ve completed all these steps, you’re officially a homeowner! It’s an exciting moment and a culmination of the hard work you’ve put into researching and selecting your home.