The home buying process includes a lot of steps from start to finish- getting your offer accepted, home inspection, appraisals- but what happens when it finally comes to closing day?
Let’s walk through the details of what to expect on closing day. Your attorney is responsible for handling the closing— from preparation, the day of, and any follow up matters. Closing day is when ownership of the property is officially transferred from seller to buyer and funds are transferred from buyer to seller.
Scheduling
The date of closing is usually set in the offer letter and typically determined by when the mortgage company will be able to process the loan. On average, the closing is within 30 to 60 days of the accepted offer. Make sure the date selected works with your schedule! Arrangements are typically finalized a few days prior to the scheduled closing.
Where does Closing take place and what do I need to bring?
The location is listed in the purchase and sale agreement but oftentimes this can be changed prior to closing. Generally, the buyer and their attorney coordinate a location. You can close at either the Registry of Deeds in the county of your purchase, your attorney’s office or the real estate office. You will need a form of ID as well as a certified bank check (or wire transfer) to cover your closings costs and down payment. The estimated total amount will be provided by your lender on the Closing Disclosure, however, your attorney will confirm this amount once they verify and approve the final numbers and potential closing credits with the selling side.
Paperwork
You will need to sign various documents including:
- A promissory note (an agreement that you will repay your mortgage to the lender).
- A mortgage document in which you are promising the lender your home as collateral for repayment of the loan amount.
- A closing disclosure which breaks down your closing costs. These typically consist of charges related to processing the mortgage including loan origination, credit checks, title search, and the home appraisal.
Some other additional documents you will need to sign are the settlement statement, tax records, and various legal disclosures. Don’t worry, the attorney will explain what each of these documents mean.
Common Mistakes to Avoid
There are a few common mistakes that you should try to avoid between getting your offer accepted and closing:
- Try to avoid closing on the last day of the month.
- Don’t skip the final walk-through! You want to make absolutely sure that there are no damages/new damages. If you decide not to go through with the walk-through, the seller can’t be held responsible for any new damages that may become apparent once all their furniture is out.
- Do not make any big purchases– the bank has already approved you for a certain amount based on your accounts. There is sometimes an additional credit check right before closing, so making a big purchase can affect your financial information and delay closing.
- Be sure to carefully read the closing documents- double check that names and addresses are correct.
- If you have an online bank or a bank that is out of state, make sure you coordinate delivery of a certified check or wire transfer before closing.
- If you or a co-borrower will be out of town on the closing date you must make sure your team knows this and the bank must approve a Power of Attorney. Note- not all loans permit powers of attorney so make sure you notify your team well in advance.
- You are not the owner until the documents are recorded. So, if you need to move in immediately notify your team so the closing can be scheduled at the Registry of Deeds so the keys can be released immediately after recording.
- Beware of cyber safety! We released tips to prevent cyber attacks during these large financial transactions. The general rule of thumb is to be very aware of email addresses from which you’re accepting files and always confirm verbally with your attorney or Realtor about any changes regarding large financial transfers or wires.
The buying process leading up to closing can be overwhelming but that’s why your Realtor and attorney are huge assets. They’ll make sure you are well prepared, on schedule, and have what you need so that you’ll avoid any mishaps so closing day will be a breeze. Congratulations, you are now the proud owner of a new home!