Expetitle Blog

What to Expect During the Closing Process

When purchasing a home, the final chapter in the process is called the closing. In this step, the buyer and seller finalize all the details of the transaction. It is beneficial to all parties involved to review what will take place on closing day ahead of time to know what to expect. Preparation and knowledge are necessary for a seamless transaction.

What exactly is a home closing?

Usually called a "settlement," it is when the buyer, seller, and lender transfer all records and funds needed to fulfill the transaction. The buyer signs legal documents related to the exchange of property ownership, pay closing costs, and the primary escrow payment for insurance and property taxes. Upon finishing the closing, the deed will be documented and ownership will be assigned. The closing is managed by a closing agent, typically a real estate attorney or title agent.

Who attends the closing?

Closing agent

Home-buyer

Home seller 

Seller's real estate agent

Mortgage lender

Attorneys

What documents does the buyer need to bring?

Essential pieces of documentation include:

The closing disclosure 

Home inspection reports

Proof of wire transfer or cashier’s check

Photo identification

Proof of homeowners insurance

Documents required by the lender 

What is being signed?

At the closing, you’ll be signing a lot of important documents, which will vary based on your state laws and the type of home you’re buying. Every legal and financial document tied to closing is important, but there are a few that are critical to the process.

Checklist of documents:

Mortgage

Closing disclosure

Promissory note - outlines terms of the loan and buyer promises to pay back what is owed

“Truth in Lending” statement - total amount of loan over its lifetime, plus interest and APR

Title or warranty deed - transfers ownership of the home

Proration papers - state how costs (utilities, HOA dues, property taxes) are divided that month

Declaration of report - buyer knows the inspection reports that have been done on the property

Abstract of title -  documents related to the title of the property 

What are the most common causes of a delay in home closings?

There are many moving parts involved in the closing process which can cause the closing to take much longer than expected:

Walkthrough Problems

During the final walkthrough, the buyer may find something that has been damaged or notice the seller removed something that was supposed to stay. The process to resolve these issues could delay closing.

Loan Problems

The homebuyer made an offer on the home before being preapproved for a loan. This can cause delay because the bank must spend time determining the amount it is willing to lend and would therefore affect the cash amount needed from homebuyer to purchase the home. 

Paperwork Problems

On closing day, the buyer and seller sign through stacks of paperwork. Previously agreed-upon statements between the buyer and the seller may be missing final documents. If the documents include any errors, the closing may take longer. It is important for the parties involved to be tedious when reading and verifying everything involved in the closing documents is accurate.