Closing On A Home: What To Expect On Closing Day
Erica GellermanFebruary 14, 2020
You’re buying your first home, you’ve had an offer accepted and you’re eager to get the keys and finally move it. Buying a home — especially your first home — can be a long process where you learn what to do as you go.
But now you hear that things aren’t final until you close on the home. What happens on closing day? And does closing day mean you’ll finally be able to move-in?
Here’s what to expect on closing day and how to get prepared, so it’s a smooth process that has you moving into your new home as quickly as possible.
What Is A Closing Date?
You have been patiently waiting for your closing, but what exactly is it? The closing process typically has two parts: closing on your loan and closing on your home.
When you close on your loan, the loan becomes final and the money is disbursed. When you close on your home, you become the legal owner of your new home. These two things usually happen at the same time. So on your closing date, your mortgage loan becomes final and you get the keys to your new home.
How Long Does A House Closing Take?
The entire process of closing on a home requires some patience. Ellie Mae, a technology company that provides support to mortgage lenders, reports that in December 2019 the average time to close on a home purchase was 51 days.
When you are waiting to move into your dream home, 51 days can feel like a very long time.
How long does the final closing take when you reach your closing day? It depends. The process may happen in person, where everyone sits around a table and signs documents. Or it could take several weeks as all signatures are collected separately.
How To Prepare For Closing?
You’re in the homestretch of buying a home — make sure you’re prepared for the closing so things can go as smoothly as possible. To prepare:
- Know when and where your closing is set to take place. You’ll also want to note who is in charge of your closing: a title agent, closing attorney, escrow agent, or someone else.
- Make a list of what you need to bring to your closing. That may include ID, proof of a wire transfer or cashier’s check for the money needed to close, your Closing Disclosure and more. The person in charge of your closing can provide you with a full list.
- Confirm the final amount you’ll need to pay at closing. You’ll find this detail on your Closing Disclosure.
- Review documents and compare your Closing Disclosure to your Loan Estimate. Make sure that your loan details are correct and that you understand all the fees.
If you have any questions that come up while you’re reviewing the documents, ask about these quickly. You don’t want to leave unresolved questions for closing day.
What Happens On Closing Day?
The logistics of the day of your closing will depend on whether you’re meeting in an office to sign your closing documents or whether you’re signing your closing documents separately. But no matter where you close, you’ll need to closely review all of the documents and sign them as well as transfer the remaining money you owe (usually by wire transfer or cashier’s check).
On closing day you’ll:
- Receive your closing documents. And there is a lot of paperwork so come prepared to keep it organized.
- Transfer money. You’ll need to pay your down payment as well as any closing costs. Your lender will pay the mortgage loan (the amount you’re borrowing), and the seller will receive their money. A closing agent will make sure that money is sent where it needs to go.
- Show proof of insurance. Before the lender agrees to fund the loan, they’ll want to see proof of homeowners insurance.
- Have an escrow account set up. You’ll also make your initial deposit into the account.
- Get ownership of the home. Once the money has been transferred and forms have been signed, you become the legal owner of the home.
Closing day is the end of your home buying process and arguably the most important.
What Are Closing Documents?
At least three-days before you close, you’ll receive a Closing Disclosure. The Closing Disclosure includes your detailed loan information, which you’ll want to compare with your Loan Estimate to make sure everything looks correct. It includes things like your loan amount, interest rate, services you’re paying for, and costs you’ll need to pay at closing.
If something looks incorrect, it’s important to ask about this before getting to your closing. If you need help making sense of it, the Consumer Finance Protection Bureau has a Closing Disclosure guide that can help.
The remainder of the documents will be reviewed and signed during closing. These documents are:
- Promissory Note: When you sign this, you are legally agreeing to repay your mortgage and will have details of your loan.
- Mortgage, Security Interest, or Deed of Trust: This document gives the lender the right to foreclose on your property if you don’t pay the loan as agreed.
- Initial Escrow Disclosure: This form breaks down what your monthly escrow payments are and how it’s calculated.
- Right to Cancel: You’ll only see this form if you’re refinancing. It details the rules for the three-day cancellation period you’re entitled to after you sign your refinancing documents.
Can You Move Into A House The Day Of Closing?
If you’re hoping to leave your closing with keys in hand and move right into your new home, that can happen. Whether or not you can move right into your new home depends on the terms you negotiated with the seller.
The seller may have asked for — or you may have offered — to give them a few days to move out of the house once the closing was completed. Or, you may have negotiated to lease the house back to them for a certain amount of time.
Absent of those, you can likely bring your moving truck over to start getting settled.
Closing day is a big day and is the culmination of your home buying journey. But don’t let details slip past you as you reach the end. Checking all of your documents thoroughly can help you make sure you avoid mistakes that may be costly and buy your home with confidence.