Steps to closing on a home
Closing on a house can be a complex process, but understanding each step can help you arrive at your closing with confidence and peace of mind. After your loan approval, home inspection, and appraisal, there are often contingencies to resolve before closing. On the closing date, you typically meet with the bank to sign legal documents and pay closing costs before receiving the keys to your new home.
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What to know before closing on a house
When you are preparing to buy a house, expect to be in close communication with your lender and real estate agent as you approach closing. Once the seller has accepted your offer and your lender has approved your financing, you're approaching the finish line of the home buying process.
Home closing process
Here are the common steps to closing on a home:
Loan approval
Once you have completed the underwriting requirements set by your lender, they notify you that your mortgage loan has been finalized.
Home inspection
Hire a licensed home inspector to thoroughly inspect the property. The home inspection report can identify significant issues that the seller must address prior to the sale.
Appraisal
Your lender will typically require an appraisal of the property. Usually, the lender chooses the appraiser, and the buyer pays for it.
Purchase homeowners insurance
Your lender will require you to provide proof of homeowners insurance before closing.
Title search
A title company performs a title search to ensure there are no legal claims or liens attached to the property.
Review the Closing Disclosure
About three business days before the closing date, you'll receive a document from your lender called a Closing Disclosure. Review this document carefully, and ensure that you understand everything included in it. If you find an error, or if something is unclear, contact your lender immediately. Consumer Finance.gov has an interactive Closing Disclosure explainer.
Resolve contingencies
If you included any contingencies in your offer, such as a financing or home inspection contingency, ensure it is resolved.
Review the seller's disclosure
Depending on your state's law, the seller is legally required to disclose any known defects in the property before closing. If you find something significant that's a potential deal-breaker, it's worth investigating thoroughly. Consider negotiating with the seller to make the repair, reduce the price of the property, or back out of the deal without losing your earnest money for significant defects.
Final walkthrough
It might be worth taking a final walkthrough 24 hours before closing. During this walkthrough, you can do a final check of the house, ensuring every agreed-upon repair has been identified and addressed and that the previous homeowner has completely cleared out of the home.
Closing day
On the closing date, prepare to sign a lot of paperwork, including the mortgage agreement, the deed, and other legal documents. You will also pay the closing costs and down payment with a bank draft or cashier's check in the exact amount.
Transfer of ownership
After all parties have signed the paperwork and the lender has transferred the funds to the seller, the title officially transfers to you, and you receive the keys to your new home.
Pro tip:
Don't make any major purchases on credit or open any new credit cards or lines of credit that can have an impact on your credit score before your mortgage loan is approved.
What to expect on closing day
The home closing process can take place in the conference room of the title company, at your lender's office or another location where you will sign the paperwork and finalize the process. Expect to spend around two hours finalizing the process. Remember to bring the following to the closing:
- Government identification (driver's license, etc.)
- Check for a down payment
- Proof of homeowners insurance
- Sales contract
After closing, the title company or escrow agent should file your deed, which shows you as the legal owner of the property within hours of the closing. It might take a few days. You can verify that the deed was properly filed with your county within a few weeks.
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