Closing on a House: What to Expect as a First-Time Buyer

closing on a house - what to expect

From the moment you receive an accepted offer on a house, everything builds towards the day when the property officially changes ownership. Closing on the home is the grand finale of the entire buying process. With all the anticipation, it’s normal to have questions pertaining to who, what, when, where and why. Here’s what you can expect and how best to prepare.

Who Will Be Present at Closing?

First off, you will be in good company at the closing table. It’s a time when many of the major players involved in your transaction all convene together. You can expect to see these folks, give or take:

Closing Agent

The agent’s role is to prepare all closing documents for the transaction. This person conducts the meeting and oversees the signing and recording of the documents. In addition, the closing agent collects the payments required to settle the transaction, including escrow deposits, down payment funds and bank fees, and then confirms the funds are properly distributed. The closing agent could work for the lender or the title company and might also be an attorney.

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Real Estate Agents

While not necessary, it can be helpful to have your real estate agent present during the meeting. Your real estate agent should know your deal inside and out and can help to provide guidance should any issues or errors crop up. The home seller’s real estate agent may be present as well.

Attorney

If your deal was particularly complex, you may have hired a real estate attorney to provide counsel throughout the transaction. Some states even require an attorney to facilitate the closing. Both the buyer and seller are allowed to have personal representation at the closing table.

Title Company Representative

During the transaction, the title company performs a search on the property and provides written evidence that the title is legitimate. A representative from the title company may also attend the closing.

Loan Officer

Financing is a very important part of a real estate deal. It’s not uncommon for your loan officer to stop by the closing to ensure everything goes smoothly.

Home Seller

If the plan is to pass paperwork at the same time as the seller, you may get a chance to meet face-to-face.

What Happens at a House Closing?

The closing, also referred to as the “settlement,” involves the simultaneous exchange of documents and funds required to complete the transaction.

To best prepare for the meeting, start exercising your writing hand and bring your favorite pen. You will be signing a variety of legal forms related to the real estate agreement and your mortgage. In addition, you will be providing payment for any remaining balance related to purchasing the home.

The giant stack of paperwork waiting for you at the table will likely include the following:

  • Closing disclosure: Summarizes the buyer’s and seller’s closing costs, separately itemized.
  • Warranty deed/title: Guarantees the buyer a clear title to the property.
  • Proration papers: Breaks down how property taxes and other dues are being divided up between the buyer and seller.
  • Statement of identity: Helps the title company identify you and separate you from other people with the same or a similar name.
  • Abstract of title: Lists all of the recorded documents and proceedings related to the property, such as surveys, easements or liens.
  • Truth in lending statement: Details information pertaining to your loan, including the amount borrowed, your interest rate and any other pertinent terms.
  • Promissory note: States your promise to pay back your loan. It is essentially an IOU.
  • Mortgage/Deed of trust: Pledges the property as security for the loan.
  • Monthly payment letter: Outlines your monthly payment amount, when the payment is due and where to send the money.

When is Closing Day?

It may feel like a lifetime ago, but the date of closing was likely set during the negotiation phase. In a financed transaction, you can expect the closing to take place at least 30 days after acceptance of the initial offer, which provides enough time to secure a mortgage. For cash buyers, closings can take place much faster.

Where Will the Meeting Take Place?

Closing procedures vary from state to state and even county to county. In some areas, it is common to convene at the closing agent’s office or the office of the title company. Other times you can meet at the local registry of deeds, your attorney’s office or even your neighborhood Starbucks!

Why is All of This Necessary?

Before you can celebrate with a bottle of champagne or get the keys to your new place, you need to get all of these formalities out of the way. Buying a home is a big deal and the closing process ensures that all of the i's are dotted and t's are crossed. After all, the closing is the final performance of all the agreements you made between the home seller and your lender. It may seem like a lot of work, but rest assured, the actual meeting can be completed within a few hours.

How to Prepare for Closing Day

Prior to sealing the deal, there are a few things that you can do to get ready.

  • Read through your contracts: Refamiliarize yourself with any specific items that were negotiated. These can include any repair agreements or credits that were formalized during various stages of the purchase.
  • Schedule a final walk-through: You’ll want to do one last look around the property to ensure the house is being left in the condition you were expecting.
  • Get your funds organized: You will likely be asked to bring a cashier’s check to the meeting or wire the funds in advance. To avoid scrambling the morning of closing, you may want to discuss your options with the bank and make sure everything is ready to go!
  • Don’t forget your I.D.: Before you can get started with signing papers, the closing agent will check to see you are who you say you are. Be sure to pack a government-issued photo I.D. like a drivers license.