What is a Home Closing and How Do They Work?

There are so many moving parts to the loan process and closing on a home. Having homeownership within reach, it’s easy to fall into wanting to rush things forward. Knowing what to expect and how to plan for closing can help you be more prepared for a hassle-free process.

What Exactly is a Closing or Closing Date?

Your closing date is the date the house closing process wraps up and you become the official new owner of the home. The closing process typically includes finalizing the details of your home loan, including signing all the mortgage loan documents.

How Long Does a Home Closing Take?

The general length of the mortgage process can be difficult to predict. Without any delays, the entire process from application to closing can be as short as thirty days, but in many cases it’s longer. Being pre-approved has the possibility to speed the process along as well. Ellie Mae, a software company that processes mortgage applications in the United States, reported that in June 2021, the average time from application to closing on a home was fifty-one days.

Signing documentation on your Closing Date can take anywhere from thirty minutes to two hours. It generally takes less time for the seller to sign closing documents than the buyer.

Who Attends a Closing?

The people required at a closing depend on state laws and the circumstances of your transaction. To confirm who will attend, we recommend speaking to your mortgage lender or attorney before your closing date.

Typically, the buyer will always attend the closing. The seller may not attend if they have already signed their necessary documents ahead of time. Other parties in attendance may include: a representative from your title insurance company who can help handle closing and escrow distribution, real estate agents, and attorneys.

What Type of Paperwork Goes into Closing?

Closing Disclosure: you should receive this document three business days prior to closing. It will include detailed loan information, such as your loan amount, interest rate, services you’re paying for, and buyer-specific closing costs. Be sure to look over your closing disclosure before the actual closing date.

Mortgage note: signing this note means you’re legally agreeing to repay your mortgage.

Mortgage, security interest, or deed of trust: a document signed by the borrower with the lender pledging the property as security against the money that is borrowed.

Initial escrow disclosure: breaks down your monthly escrow.

Remember, read over your paperwork carefully. Although you may feel pressured to skim-read or skip over large sections, be sure you read everything down to the fine print. Double check your interest rate and all other agreed terms are clearly mentioned or amended.

What Are Some Common Closing Mistakes?

Sometimes, closing delays are unavoidable, such as the appraisal coming back too low. If the appraisal comes in below the listing price, it can delay the process and potentially cause closing numbers to be redone or possible reconstructing of the loan. While this is out of the buyer’s control, there are some things you can do to ensure your closing process continues as planned.

Make sure you’re turning in all your documentation in a timely manner. Financing issues can derail or jeopardize your housing transaction. It’s important to check in regularly with your Loan Originator, or Loan Processor depending on the stage your loan is in, and your Real Estate Agent to ensure everything is progressing smoothly.

It’s also important to avoid making big financial changes while you’re waiting for your mortgage approval or closing process to complete. Putting large purchases on your credit card, applying for new credit, changing jobs, or changes in marital status can affect the terms of your mortgage or prevent the loan from moving forward.

How Should You Prepare for Your Closing?

Be Sure of the Details of Your Closing Date

Knowing when and where your closing is set is just the beginning. You should also take note of who will be attending and who oversees the closing.

Make a List of What You Need to Bring

While this list can vary, you will typically need your ID, proof of a wire transfer or cashier’s check for the money needed to close, your Closing Disclosure, and other important documents. To ensure you’re bringing everything needed, be sure to ask the person in charge of the closing.

Review Documents and Compare Your Closing Disclosure to Your Loan Estimate

The final amount you’ll need to pay at closing will be outlined in your Closing Disclosure. Comparing your Disclosure to the Loan Estimate, which you received at application, will ensure your loan details are correct and understandable, which may help to save some time at closing.

What Happens After Closing?

After closing, it’s recommended to make copies of all your paperwork and store them in a secure spot. It’s important to keep these documents in case you need them in the future. If all terms are agreed upon and the deal is complete, you can move in.

Experts also recommend considering new locks for your new home for extra security. This ensures that any spare keys floating around in the pockets of strangers are rendered useless. You can then begin the process of making your move official by alerting necessary individuals and companies of your change of address.

Homeownership is in Sight

Closing day can also be thought of as your homeownership graduation. All the hard work you’ve done to find a home you love and a mortgage that works for you has paid off. Although you may be tempted to get your keys as quickly as possible, don’t overlook important details as you reach the end of your homebuying journey.

To make your homeownership journey understandable and stress free, contact us today. You’ll be put in touch with a Loan Originator who will answer whatever questions you may have and ensure you get the financing you need.