Lesson-Closing Your Home Purchase

Introduction

You’re almost there—homeownership is just around the corner! Before you can officially receive the keys, you must complete the closing process. Also known as settlement, closing is when you sign the final documents, pay any remaining costs, and officially take ownership of your new home.

Key Concepts

• Closing Costs: Fees associated with finalizing your home purchase, typically 2%-5% of the loan amount.
• Final Walk-Through: A last inspection of the home to ensure it meets agreed-upon conditions.
• Closing Documents: Legal paperwork that finalizes your mortgage and homeownership.
• Closing Disclosure: A summary of your loan terms and costs, provided three days before closing.

Getting Prepared for Closing

1. Secure Your Closing Funds

Your lender will provide a loan estimate outlining your total closing costs. These fees can range from 2%-5% of the loan amount and may include:
✅ Loan origination fees
✅ Title insurance
✅ Property taxes and homeowner’s insurance
✅ Appraisal and inspection fees

📌 Tip: Request a detailed breakdown of closing costs from your lender and ask about options to roll some costs into your loan if needed.

📖 Learn More: Understanding Closing Costs

2. Request a Final Walk-Through

A final walk-through should be scheduled 24 hours before closing to verify:
✅ All agreed-upon repairs have been completed.
✅ The home is in the expected condition with no new damage.
✅ The seller has completely vacated the property.

📌 Tip: Bring your purchase contract and home inspection report to compare notes.

3. Review Closing Documents in Advance

There will be a lot of paperwork to sign on closing day. To avoid feeling rushed, ask your lender or closing agent for your documents ahead of time. Key documents to review include:
📄 Closing Disclosure (sent 3 days before closing) – outlines final loan terms and costs.
📄 Promissory Note – your legal agreement to repay the mortgage.
📄 Deed of Trust – secures the lender’s interest in the home until your loan is paid.

📌 Tip: If any numbers have changed significantly from your initial loan estimate, contact your lender for clarification before closing.

📖 Learn More: Steps to Prepare for Closing Day

What to Expect on Closing Day

Closing day is when ownership of the home officially transfers to you. The process usually takes a few hours and includes:

1. Where Closing Takes Place

Closings typically happen at a title company, with the following people present:
🏡 You (the buyer) and any co-borrowers
🏡 Your real estate agent
🏡 A closing agent (who facilitates the signing process)
🏡 The seller’s real estate agent

2. What to Bring

✅ A state-issued photo ID
✅ Proof of homeowners insurance
✅ A cashier’s check or wire transfer receipt for any remaining closing costs
✅ A copy of the purchase contract

3. Signing Closing Documents

You’ll review and sign several legally binding documents, including:
✍️ The Mortgage Agreement – details your loan terms.
✍️ The Deed of Trust – transfers homeownership to you.
✍️ The Closing Disclosure – confirms all financial details of the transaction.

📌 Tip: Take your time reading each document and ask questions if anything is unclear.

4. Receiving Your Keys

Once everything is signed and the transaction is complete, you’ll receive the keys to your new home—congratulations! 🎉

📖 Estimate Your Closing Costs: Closing Costs Calculator

Common Misconceptions

❌ “I can just read the closing documents on the day of signing.”
✅ It’s best to review them ahead of time so you understand your financial obligations.

❌ “I don’t need to do a final walk-through.”
✅ The final walk-through ensures that agreed-upon repairs are completed and the home is in the expected condition.

❌ “Once I sign the closing documents, I own the home immediately.”
✅ While most closings are finalized the same day, some may take additional time for the title and funds to be processed.

Practical Applications

• Set aside funds for closing costs—don’t be caught off guard by last-minute expenses.
• Schedule a final walk-through to avoid unexpected surprises after closing.
• Carefully review your Closing Disclosure to ensure all fees match what was originally estimated.

Next Steps

✅ Confirm your closing date with your lender and real estate agent.
✅ Secure your closing funds and prepare for payment.
✅ Review your closing documents in advance.
✅ Attend your closing appointment and sign your final paperwork.
✅ Celebrate—you’re officially a homeowner! 🎉

By understanding the closing process, you can feel confident and prepared as you take this final step toward homeownership. 🏡✨