What Happens in a Real Estate Closing?

June 5, 2014

Where Will It Be Held?

The closing can be held at the title company’s office, the lender’s office, the real estate attorney’s office, or any other agreed upon location. Sometimes closings are held in the actual property that is being bought.

What Happens at Closing?

You will be required to review and sign all the necessary documents associated with the real estate transaction. Make sure you understand what you are signing (see more about this below). You will also need to provide proof that you have acquired the necessary homeowners insurance. You’ll provide your down payment (if applicable), closing costs, prepaid interest, taxes and insurance in a certified check or cashier’s check (consult with your title agent, real estate professional, and/or attorney for details).

Who Will Be There?

Not every home buyer’s closing is the same, so some of the people listed here may not be in attendance for your closing. However, most real estate closings will include at least a couple of the following:

Your real estate agent.
The sellers’ real estate agent.
The sellers. Your attorney (if you decided to hire one).
A representative from the builder/development company (if you are purchasing a newly constructed home).
A representative from your lender.
Someone from the title company.
A notary public.

What Will Need to be Signed?

The most daunting part of the closing process is all the paperwork that needs to be looked over and signed. While there will likely be a big stack of papers that require your attention, three major documents are as follows:

HUD-1 Settlement Statement – This is an itemized list of final costs and credits for both the buyer and the seller. The items on the list should be based on the terms of the contract. It is recommended that you review the HUD-1 paperwork a day or two before the closing, if possible. Always double check the paperwork before signing – and that goes for the rest of the items in this list.
Deed of trust or mortgage – This document basically says you are agreeing to a lien on the property. In other words, it’s saying you are technically considered the “owner,” but the lender has the lien against the home in security of repayment.
Promissory note – This is a document that says you are agreeing to pay your mortgage lender according to the terms set out in the mortgage. Think of it as a much more complex and legally-binding “IOU.”

What Questions Should You Ask?

You should ask any questions you have about the closing process. In fact, it’s a good idea to ask a few questions before the closing date, so you’ll be prepared. You can ask your real estate agent and/or attorney about details on the documents, contract, whether it’s too late to make any changes, what you’ll need to bring to closing, and so forth. Whether you are a buyer or seller, if you are at all confused or unsure of ANYTHING in your closing documents, don’t be afraid to speak up. If you notice any discrepancies in the paperwork, or if someone makes changes to something in the documentation, make sure you ask your attorney about the possible ramifications of such issues and make sure any changes made are fair and legal. Remember, closing on a home means making a very large, very serious transaction. Any amount of preparedness you can achieve will serve you well during this important time.

*Please note, the content of this article was not written by a legal professional. For exact details on the real estate closing process and information on legal issues, consult a qualified attorney.