6. What Happens on Closing Day?

by Local Title

Closing day is the final step in the home-buying process, where ownership of the property is officially transferred from the seller to the buyer. It’s an exciting and often complex day that involves signing numerous documents, finalizing financial transactions, and ensuring that all legal and contractual obligations are met. Understanding what to expect can help ensure a smooth and stress-free closing.

Reviewing and Signing Documents

One of the primary activities on closing day is reviewing and signing a variety of legal documents. These include:

  • Closing Disclosure: This document provides a detailed account of the loan terms, monthly payments, and closing costs. It’s important to review this carefully to ensure everything matches the Loan Estimate provided earlier in the process.
  • Promissory Note: This is the buyer’s written promise to repay the mortgage loan, outlining the terms of the loan, including the interest rate, payment schedule, and duration.
  • Mortgage or Deed of Trust: This document secures the loan with the property as collateral, giving the lender the right to foreclose if the buyer fails to make payments.
  • Deed: The deed transfers ownership of the property from the seller to the buyer. The buyer will sign the deed, which is then recorded with the local government to officially document the change in ownership.
  • Affidavits and Declarations: These documents confirm various legal aspects of the transaction, such as the buyer’s intent to occupy the property as a primary residence and the seller’s declaration of the property’s condition.

Final Walkthrough

Before heading to the closing meeting, the buyer typically conducts a final walkthrough of the property. This is the last chance to ensure that the home is in the agreed-upon condition and that any negotiated repairs have been completed. If any issues are discovered, they can be addressed before finalizing the transaction.

Financial Transactions

On closing day, the financial aspects of the sale are finalized. This includes:

  • Payment of Closing Costs: The buyer pays the closing costs, which can include loan origination fees, title insurance, escrow fees, and more. These costs are typically outlined in the Closing Disclosure.
  • Down Payment: The buyer provides the down payment, which is usually a percentage of the home’s purchase price. This payment is often made via a certified or cashier’s check or wire transfer.
  • Disbursement of Funds: The escrow agent or closing attorney disburses the funds to the appropriate parties, including paying off any existing mortgages on the property and distributing proceeds to the seller.

Recording the Deed

After all documents are signed and funds are disbursed, the deed is sent to the local county recorder’s office to be recorded. This official recording makes the transfer of ownership a matter of public record. The buyer will receive a copy of the recorded deed, which proves their ownership of the property.

Receiving the Keys

Once all paperwork is completed and the transaction is officially recorded, the buyer receives the keys to the property. This marks the end of the closing process and the beginning of the buyer’s ownership of their new home.

Closing day is the culmination of the home-buying process, bringing together all the steps and details that have been managed over the preceding weeks or months. By understanding what happens on this important day and being prepared, buyers can navigate the final steps with confidence and excitement, ready to enjoy their new home.