What to Expect on Closing Day

What to Expect on Closing Day: A Step-by-Step Guide

Closing day is one of the most important milestones in the home buying or selling process. It's the day when all the hard work pays off, and ownership of the property officially changes hands. However, it can also be a day filled with paperwork, legal requirements, and last-minute details. Whether you’re a buyer or a seller, knowing what to expect on closing day can help ensure a smooth and successful transaction. In this guide, we’ll walk you through the key steps and what you need to be prepared for.

1. Reviewing the Closing Disclosure

For buyers, the closing process typically begins a few days before closing day when you receive the Closing Disclosure from your lender.

A. What is the Closing Disclosure? The Closing Disclosure is a detailed document that outlines all the final terms of your mortgage, including the loan amount, interest rate, monthly payments, and a breakdown of all closing costs. It’s important to review this document carefully to ensure everything matches what you were previously quoted.

B. Verify the Details Make sure all the information is accurate, including your name, the loan amount, interest rate, and any other financial details. If you notice any discrepancies, contact your lender immediately to resolve them before closing day.

Related Content: Understanding Your Closing Disclosure by choosing the right lender

2. Final Walkthrough of the Property

On the day before or the morning of closing, buyers will typically conduct a final walkthrough of the property.

A. Purpose of the Walkthrough The final walkthrough is your opportunity to ensure that the property is in the condition agreed upon in the contract. This means verifying that any requested repairs have been completed and that the home is clean and free of the seller's belongings.

B. What to Look For

• Check that all appliances are in working order.
• Verify that agreed-upon repairs have been made.
• Ensure there are no new issues, such as leaks or damage.
• Make sure all fixtures and items included in the sale are still in place.

If you find any issues during the walkthrough, your real estate agent can help you address them with the seller before proceeding to closing.

Related Read: Final Walkthrough Checklist: What to Look For

3. Understanding the Closing Costs

Both buyers and sellers should be prepared to cover certain costs on closing day. These costs can include fees for the lender, title insurance, property taxes, and more.

A. Buyer’s Closing Costs Buyers should be ready to cover costs such as loan origination fees, appraisal fees, title insurance, and any remaining down payment. Your Closing Disclosure will outline the total amount you’ll need to bring to closing, typically in the form of a cashier’s check or wired funds.

B. Seller’s Closing Costs Sellers may need to pay for agent commissions, title transfer fees, and any outstanding property taxes. These costs will be deducted from the sale proceeds.

4. Signing the Paperwork

Closing day involves a lot of paperwork, and both buyers and sellers should be prepared to sign multiple documents.

A. Documents for Buyers

• Promissory Note: This document outlines your promise to repay the mortgage.
• Deed of Trust: This secures the loan by giving the lender a claim against the property if you fail to make payments.
• Closing Disclosure: You’ll sign this to acknowledge that you’ve reviewed the final terms of the loan.
• Loan Application: You may be asked to sign a final version of your loan application.
• Other Documents: Depending on your situation, you may need to sign additional documents related to your mortgage or the property.

B. Documents for Sellers

• Deed: This document transfers ownership of the property to the buyer.
• Closing Statement: This details the financial aspects of the sale, including the sale price, closing costs, and net proceeds.
• Bill of Sale: This lists any personal property (e.g., appliances) included in the sale.
• Affidavits: These may include statements that you are the legal owner of the property, that there are no liens, and that you have disclosed all material facts about the property.

5. Transfer of Ownership

Once all the documents are signed, the ownership of the property is officially transferred from the seller to the buyer.

A. Recording the Deed After the paperwork is signed, the deed is recorded with the local government, officially making you the legal owner of the property. This step is typically handled by the title company or attorney.

B. Exchange of Keys The seller will hand over the keys to the property, along with any garage door openers, security codes, or other items related to the home. Congratulations, the home is now yours!

C. Final Payments The buyer will provide the necessary funds to cover closing costs and the down payment, and the seller will receive the proceeds from the sale after any outstanding mortgages and fees are paid.

Conclusion: Be Prepared for a Smooth Closing Day

Closing day is the final step in the home buying or selling process, and while it can be a bit overwhelming, being prepared can help ensure everything goes smoothly. By understanding the steps involved and working closely with your real estate agent, lender, and attorney, you can navigate closing day with confidence and start the next chapter of your life in your new home.

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