The "closing" is one of the final steps in the process of buying/selling or refinancing a home. It is
when all parties involved, including the buyer and seller, meet to finalize the transaction and where
purchase money and ownership documents, including the conveyance deed, exchange hands. The closing can
only take place once all of the conditions of the real estate contract and the lender?s requirements have
been met.
The location of the closing is typically at the Realtor?s office, Lender?s office, the buyer or seller?s
attorney?s office, many times at the title company?s (also known as Settlement Agent) office, or even at
the borrower's home. The title company will coordinate who should be there and at what time. If you are
unsure about directions to the place of closing, don?t hesitate to call the title company and ask them
for driving directions. A "trip tik" can be printed and faxed or mailed to you in advance. Most people
are already a little nervous about the closing, and the last thing they need is to get lost on the way.
Depending on your geographical area, all parties may or may not be present at the same time in a closing.
The seller may sign all his/her documents at a different time than the buyer. This is known as an "Escrow
Closing." In an Escrow Closing, the seller may or may not receive the proceeds check on the same day.
The other type of closing is when all parties are present at the same time. This is known as a "Round
Table Closing." In this type of closing, the seller will receive his/her proceeds at the closing (table
funding). Regardless of the type of closing, the documents signed will usually be the same.
When you arrive at the closing, you will be greeted by your Closing Officer or Settlement Agent and
offered refreshments. Your Closing Officer or Settlement Agent is the one who will collect all the funds
involved, including money due from buyer and the funds from the new lender. You will then be directed to
a "Closing Room" or Office where he/she will explain each document to you, including a breakdown of all
closing costs, also known as the set Settlement Statement.
The HUD1 Settlement Statement sets forth the net proceeds, amount due to the Seller, and the amount of
funds needed to be collected from the buyer. The buyer should never bring a personal check to the
closing. It is customary for the Title Agent and/or Realtor to let the buyer know ahead of time how much
is needed at the closing so that he/she may bring a Cashier?s check.
Never sign a document that you don?t understand. Don?t hesitate to ask the Closer to again describe what
the document means. Considering that he/she closes real estate transactions often, they are used to
explaining documents over and over again, so you shouldn?t feel embarrassed about asking. If you are at a
Round Table Closing, the Seller(s) will generally sign their documents first, but not always. It just
depends on the practice of the Closing Officer or Agent. The Closing Officer/Agent will then witness and
notarize various documents and ask you for your driver?s license or green card. You must bring a driver's
license, passport or other acceptable form of identification with you to the closing. If you're uncertain
about what form of identification to bring, please do not hesitate to ask your closing agent in advance
of the closing.
Once all the documents are signed, the Seller, along with other parties due money from the transaction,
may or may not receive his/her check. Sometimes the title company is funded by the buyer?s new lender
after the closing and could take a few days. The buyer and seller will exchange keys to the property or
arrangements will be made to do this at a later date. The Realtor may, at this time, provide information
for changing utilities into the new buyer?s name, and other details relating to the sale may be settled
at this time, such as arranging the removal of items from the house by the seller.
Sometimes it is necessary for the Seller to remain in the house for a while after the sale. If this is
the case, generally a "leaseback" agreement is negotiated at this time. Once all the above steps are
finished, your closing is complete! The Title Agent will now record the conveyance deed and/or the new
mortgage with the county recorder for public record. The buyer should receive an owner's title insurance
policy and the recorded deed, which will be returned to the buyer from the recorder's office, within a
few weeks. A copy of everything that both parties will be signing will be provided at the closing. The
buyer may be presented with a bigger package than the Seller, since the closing is a little more
complicated for the buyer, and the buyer is required to sign more documents than the Seller.
Below is a list of documents that you can expect to sign at closing. This list is not
all-inclusive, but it should give you an idea of the types of documents that will need to be executed.
Buyer
- HUD1 Settlement Statement
- Compliance Agreement
- Mortgage
- Lender's Note
- Truth In Lending
- Survey Affidavit or New Survey
- Final Good Faith Estimate
- Interest Statement
- Notice of Right to Cancel
- Name Affidavits
- Occupancy Affidavit
- Various IRS forms
- Completed 1003-Loan Application
- Flood Insurance Notice
Seller
- HUD1 Settlement Statement
- Compliance Agreement
- Conveyance Deed
- Seller?s Affidavit
- Gas and/or Pest Inspections
- Home Warranty
- Payoff Authorizations
- Name Affidavits