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It's a long journey to get there. While closing is very definitely a beginning, it can feel like a bit of an end. It usually takes 30 to 45 days to close on a home from submitting your initial mortgage application. During that time, your bank will review your application and approve it, and go through the underwriting process. You put in your offer, and it is accepted. An appraisal will happen, to ensure that the house is worth something close to what you paid for it and is good collateral to your loan. Now, the deed will be transferred (although these days, generally, no physical paper changes hands).
So, what happens on closing day itself?
Is Closing Face to Face or Can it be Done at a Distance?
Closing traditionally happens with everyone around a table. However, given the current circumstances, virtual closing is a service provided by some banks. It tends to take a bit longer than the hour or so usually required to sign everything at the table, but it is an option if you are unable or unwilling to get face to face with the seller. It may also be much faster. Sometimes online, mail, or mobile closing may also be done if the seller has already left the area, or the country.
What Should You Bring?
Check with your closing agent and lender rep what you should bring, but you will need:
- Driver's license or other proof of identity. Some lenders may require two forms of identification, which can be complicated if you don't have a passport.
- The Closing Disclosure. Usually you get this three days prior and you should read it and compare the documents against it.
- Cashier's check or wire transfer receipt for closing funds.
- Your checkbook (just in case).
- Proof that you have purchased homeowners' insurance, which most lenders require you to get before taking possession.
Everything you owe will be on the Closing Disclosure, but it generally includes a portion of property taxes, the lender origination fee, title insurance, and any third-party fees not already paid. If there is a HOA, you will owe their fees too.
Who is Involved?
The closing meeting varies from place to place, but generally the following will be present, other than you:
- The closing agent, who generally works for either the lender or the title company.
- Any attorneys hired by you or the seller.
- The title company representative.
- The seller.
- The seller's real estate agent.
- Your bank or lender.
Yes, that's a lot of people to get around a table. The meeting will be conducted by the closing agent, who will make sure everything happens that needs to.
What Will Happen at the Meeting?
A lot of signing. You will need to sign at least three documents. These are:
- The closing disclosure already mentioned.
- The deed of trust or mortgage, in which you agree to the lien on your property that will serve as collateral for your mortgage.
- A promissory note, which covers when you will make your mortgage payments and where you will send them.
You need to read these documents carefully. Don't be afraid to ask questions or have your attorney check things. Don't sign if there are blank lines. Meanwhile, the seller will be signing their own documents. You will both need to sign the standard closing documents provided by the title company, which includes an affidavit of any recent judgments, divorces or bankruptcies, a compliance agreement to promise to work with the title company if there's a mistake, and a disbursement agreement to allow the loan proceeds to go to your lender.
You will also need to review the bill of sale. If you are purchasing a new home, you will receive a certificate of occupancy. This says that the property is habitable and up to code. A few places require this for used homes too.
Finally, you will receive a closing packet. Put this in a safe place and if they give you digital copies (most do) back them up.
Then you will get the keys.