It’s closing day! The day you have been waiting for. Once you secure the keys, the house is yours! Michele Harmon Team has answers to some of the questions you may have as closing day approaches.
What Exactly Does “Closing” Mean?
Closing is the final step of the home buying process. Closing happens when you, as the buyer, takes ownership of the property, usually by taking possession of the deed. To reach this point, you will need to provide funds to the title company for the purchase of the home. The title company will disperse the funds to the parties of the transaction. On closing day, you will sign all necessary paperwork to legally release the funds from your lender, if you are borrowing, in addition to other legal documents.
Steps Just Before Closing
- The Closing Disclosure
At least three banking business days prior to closing, your lender will provide you with a Closing Disclosure (CD), which will detail all the financial terms of your transaction and provide you with the final figures you will need to bring to closing. It is critical that you acknowledge this disclosure in a timely manner so your closing date is not compromised. Any questions regarding the figures or execution should be directed to your lender and/or title company. The point of this formal review process is to ensure there are no surprises at the closing table.
- The Final Walk-Through
Most Real Estate sale contracts allow the buyer to walk through the home within 24 hours of closing to check the property’s condition. You and your agent will make sure the home is in the agreed upon condition per contract details.
- Closing Day
When closing day arrives, we will meet at the title company unless other arrangements have been made. All signers, including non-borrowing spouses, will need to provide a valid government-issued photo ID, and funds to close should be provided in the form of a Cashier’s Check payable to the title company, unless arrangements for wired funds have been made in advance.
Who is Invited to the Closing?
Typically, you will be joined by:
- Your Agent
- A Title Company Representative
- Your Loan Officer (Although, their attendance is not required)
As a home buyer, you will have to sign what may seem like a mountain of paperwork – including the deed of trust, promissory note (promising the lender you will pay back the loan), and other documents.
How Much Will I Pay for Closing Costs?
Let’s unpack what you should expect to pay in closing costs, so that you are not unpleasantly surprised on closing day.
Closing costs can vary widely by location and your home’s purchase price. Some costs are split between you and the seller, but as the buyer, a lot of the costs stem from obtaining financing from your lender. You can generally expect your closing costs to be 3% to 4% of the home’s sales price. So, on a $300,000 home, you can pay anywhere from $9,000 to $12,000 in closing costs.
You can try to predict closing costs with NerdWallet’s Closing Cost Calculator, which allows you to plug in your mortgage details to get a rough estimate of what your costs will be.
Buyer Closing fees often include (but are not limited to):
- A loan application fee
- An origination fee, which lenders charge for processing your loan
- The appraisal fee
- A fee for pulling your credit report
- An underwriting fee, which covers the lender’s costs of researching whether to approve you for the loan
- A title search fee
- Property taxes, which are due within 60 days of the purchase
- A recording fee for filing a public land record with the courthouse
What Should You Bring?
At the closing you should have:
- A government-issued photo ID
- A cashier’s check or proof of wire transfer, to cover the remainder of the down payment and your closing costs
You’ve Made it to Closing Day!
Congratulations! Once you have climbed that mountain of paperwork and have those keys in your hands, you officially own your home! It is celebration time! You put in a lot of hard work, including building relationships with your agent, your lender, and other experts along the way. Now it’s time to start investing in other relationships, like with your new neighbors!
Still have questions? We are happy to help! Contact us at 713-818-1330 for questions or more information on the home buying process.