Who attends?
The number of people at your closing depends on many factors, including the property’s location, the property type and the nature of the sale, such as an all-cash purchase versus a traditional mortgage. Here’s who might be present:
- Your attorney (if you have one)
- The seller’s attorney (if they have one)
- A lender’s representative
- The seller’s representative
- Your real estate professional
- The seller’s real estate professional
- The closing agent (usually a title company representative)
- A notary public
What you do at closing:
Usually, closings are held at the offices of one of the representatives involved: the title company’s, an attorney’s or the lender’s.
Here’s what happens:
You review and sign all your loan documents. Make sure you understand the terms of each document. If something is different from what you expected or agreed to, don’t sign until you resolve the issue. You provide documentation of homeowners insurance and inspections (if applicable). You give a certified or cashier’s check to cover the down payment (if applicable), closing costs, prepaid interest, taxes and insurance. You could also send these funds in advance via wire transfer. Your lender distributes the funds covering your home loan amount to the closing agent. Depending on your loan terms, you may also be required to set up an escrow (or impound) account to cover property taxes and homeowners insurance in addition to your monthly mortgage payment.
A note about closing costs:
Closing costs are costs associated with your loan, and it’s important to budget for them. Closing costs may include discount points, recording fees, loan origination fees, appraisal charges, notary fees, attorney fees, title insurance and more. They usually total between 2 and 5 percent of your home’s purchase price. You can use Bank of America’s Closing Costs Calculator to estimate what your costs might be.
You should get a sense of how much your closing costs will be when your lender provides you with an initial Loan Estimate. You receive this estimate within three days of submitting your mortgage application. When your loan is approved, you receive a Closing Disclosure, which lists your finalized closing costs.
You may pay some fees noted in your Loan Estimate and Closing Disclosure before closing, such as those associated with credit reports. For the rest, ask your closing agent what payment methods are acceptable.
What you sign at closing:
A deed of trust or mortgage is a document that puts a lien on your property as collateral for your loan. The promissory note is a legal agreement to pay the lender, including when you will make your payments and where you will send them. A Closing Disclosure (CD) is an itemized list of your final credits and charges, based on the terms of the contract. You should receive a copy of the CD for your review at least three days prior to the closing.
Homeowner tip:
Don’t sign your Closing Disclosure if it’s significantly higher than your Loan Estimate or if you see a different rate on your loan than you agreed to. In many cases it’s easy to resolve such discrepancies, but be sure you’re satisfied and understand your loan terms before signing.
How long does a closing take?
Closing on a home can be time-consuming, so be sure to set aside several hours for it. Knowing what’s expected of you can make the process go faster and make you more confident during this final step in the journey to homeownership.
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