Lesson-Closing Your Home Purchase: A Step-by-Step Guide

Introduction

Homeownership is within reach, but before you get the keys, you must finalize the closing process. Closing, also known as settlement, is when you sign the final documents, pay closing costs, and officially take ownership of your new home.

Did You Know?

📌 The average time to close a purchase loan is 43 days.

Proper preparation can make your closing process smooth and stress-free. Here’s what you need to know to get ready.

Key Concepts

What Happens at Closing?

✔ Final documents are signed, making the home legally yours.
✔ Closing costs are paid, covering lender fees, taxes, and other expenses.
✔ Ownership of the home is officially transferred to you.

Why Preparation Matters

✔ Avoids last-minute surprises or delays.
✔ Ensures your closing costs and loan terms match expectations.
✔ Helps confirm the home is move-in ready before finalizing the purchase.

Steps to Prepare for Closing

1. Secure Your Closing Funds

📅 When to Do This: After receiving your loan estimate (typically within 3 business days of your loan application).

Why It’s Important:

✔ Closing costs typically range from 2%–5% of the loan amount.
✔ Your loan estimate provides an overview of expected costs.
✔ Three days before closing, you’ll receive a closing disclosure with final costs.

What to Do:

🔹 Review your loan estimate to prepare for expenses.
🔹 Compare it with your closing disclosure to ensure accuracy.
🔹 If you see major discrepancies, contact your lender for clarification.

📖 Learn More: [Closing Costs Explained]

2. Request a Final Walk-Through

📅 When to Do This: 24 hours before closing.

Why It’s Important:

✔ Confirms that all agreed-upon repairs have been made.
✔ Ensures the home is in the expected condition.
✔ Verifies that the seller has fully vacated the property.

What to Do:

🔹 Walk through the home with your real estate agent.
🔹 Check that appliances, plumbing, and electrical systems are functional.
🔹 Ensure that fixtures included in the sale (e.g., light fixtures, appliances) are still present.

📌 Pro Tip: If you find issues (e.g., uncompleted repairs or missing fixtures), address them with your closing agent before signing.

3. Read Closing Documents in Advance

📅 When to Do This: At least a few days before closing.

Why It’s Important:

✔ Closing documents are legally binding, so reviewing them early helps you avoid mistakes.
✔ Buyers often don’t have time to read every detail at closing.

What to Do:

🔹 Ask your attorney or closing agent for copies of the closing documents.
🔹 Review key documents, including:
✔ Closing Disclosure – Final loan details, costs, and terms.
✔ Mortgage Note – Your promise to repay the loan.
✔ Deed of Trust – Secures the mortgage against the property.
🔹 Contact your lender with any questions before signing.

📌 Pro Tip: If you see unexpected changes in fees or terms, discuss them with your lender immediately.

Common Misconceptions

❌ “I can just bring my down payment to closing and be done.”
✅ Closing costs are separate from the down payment and can range from 2%–5% of the loan.

❌ “I don’t need a final walk-through if the home looked fine before.”
✅ Last-minute issues, damages, or missing fixtures can occur—always do a walk-through!

❌ “I can read all the documents at the closing table.”
✅ Buyers often don’t have enough time—request and review documents in advance.

Practical Applications

🔹 Set aside funds for closing costs based on your loan estimate.
🔹 Schedule a final walk-through to ensure the home is in good condition.
🔹 Request closing documents in advance to review terms before signing.
🔹 Compare your closing disclosure to your original loan estimate to check for discrepancies.

Next Steps

✅ Confirm your closing date and time with your lender and agent.
✅ Secure your closing funds and review final costs.
✅ Perform a final walk-through of the home.
✅ Read and understand your closing documents before signing.
✅ Ask questions! Your real estate and loan team is there to help.

By following these steps, you’ll be well-prepared for a smooth and successful closing day—and officially become a homeowner! 🏡🎉