The Home Buying Process
Step 8 – What to Expect at the Closing
Congratulations! You made it to the big day. Closing on your new home.
Closing on your first home is both scary and exciting at the same time. Scary because you now have a very large debt, the mortgage, tied to your name, but exciting because for the first time you have a place you can call home that belongs to you – as long as you continue to make the payments.
The day or two before closing we should receive the Closing Statement (previously called the HUD-1). This will outline all the loan costs, pro-rated costs with the seller, and anything else that is required by law to be documented on the Closing Statement. The Closing Statement will closely resemble the document that the lender had you sign about five days prior, so there shouldn’t be any surprises. We will both review this document closely to make sure that everything is accurately reflected from the contract and subsequent amendments to include the closing costs.
It is important for buyers to understand that even though we ask for the seller to pay closing costs up to $3000 for example, there are certain costs that the seller cannot legally pay. So occasionally, a portion of the $3000 is returned to the seller. This is not your money, it is the sellers. If your lender cannot apply the full $3000, then the difference is returned to the seller.
Any issues with the Closing Statement are identified to the lender and the closing agent. Once we have a final approval, we are cleared to close. You will need to bring a certified check made out to the title company to closing for the amount at the bottom of the Closing Statement identified as “Cash From Buyer.”
Either the day of closing or the day prior, we will do our final walk-through to verify that all the inspection resolution items are complete, and the home is in the same condition it was in the last time we saw it. Ideally, the seller will be moved out and the home clean.
Typically, at the closing, we will meet the sellers and their listing agent for the first time. I prefer to meet at the title company because the closer frequently has to verify information at her desk, but occasionally the listing agent will insist on closing in their office.
In addition to the seller, their agent, and us, the closing agent with the title company and hopefully your lender will also be present. Again, this is why you want a local lender – you want them at the closing table to fix any last-minute issues.
The closing agent will want a valid picture ID with your signature. She will make a copy of the ID and have you sign their notary book. Then the fun begins.
The closer will start by verifying the sales price of the home and the financials by reviewing the Closing Statement for each party. At this time, you will hand over the check for the “cash from buyer.” Be prepared to get writer’s cramp at the closing table. For some documents, such as the Closing Statement, you might be required to sign multiple copies, so all parties receive an original. In addition to this, you will be signing all your loan documents. The number of documents varies with each lender, but you can expect to sign your name 25 – 40 times during the closing. The closing agent will explain each document in as much detail as you need, so you are comfortable with what you are signing.
Once everything is signed, the closer will excuse herself to make copies of documents and to verify that the lender has wired the money for your loan. Typically, while the closing agent is out of the office, the seller will turn over all keys, garage door openers, and documents specific to the property. It is amazing how relaxed everyone is at this point and sometimes can turn into a party. This is when you are free to ask about anything with the property or the neighborhood.
Once the closer has confirmed that they have received the wire from your lender, she will return with the documents for each party and checks for the seller and the real estate agents.
At this point, everyone is free to go and you are free to start moving in!
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