A "loan closing" is the transfer of the title from the seller to the buyer, and the settlement of all the monies that are due. The real estate agent or broker, your attorney, the bank's attorney, the seller and their attorney, and of course you, the buyer, will participate. While this can be a stressful undertaking, preparation can ensure that all goes smoothly.
How do I prepare?
Conduct a walk-through or final inspection of the premises within the 24 hours prior to closing to ensure that the property is in an acceptable, move-in condition.
Note: If a problem with the house is discovered after the closing, you have no recourse against the seller of the property; the problem is entirely yours to address. It is therefore important to take a serious look at the property during the final walk-through.
What do I bring to the closing?
A certified cashier's check or treasurer's check is required to cover all closing costs. The closing attorney will give you the correct amount prior to the closing date.
A homeowners' insurance policy, binder, and a paid receipt for the first year's premium, which covers 100% of the replacement cost of your home, is also required.
What happens during the actual closing?
The closing is the actual purchase transaction where the property is deeded from the seller to the buyer. This generally takes place in the attorney's office or at the Registry of Deeds; it can also be done at your lender's offices. To help you understand the logical flow of the closing process, including a description of standard steps and expectations, see the closing timeline below.
You will be contacted by the lender's attorney with instructions on what to bring to the closing. Usually, a driver's license, insurance binder and cashier's check for the remainder of the downpayment and closing costs are requested. You should read all documentation before signing, and should feel free to ask the closing attorney each and every question you may have.
There are a number of costs associated with closing the loan and finalizing the purchase of your new home.
Note: You should consult your attorney for review and confirmation of your HUD-1 Statement, which itemizes all the costs associated with closing your loan (see the link below for more information).
The following is a list of the standard costs associated with the closing process:
- Any points involved in the transaction (a point is 1% of the loan amount)
- Attorney fees
- Title search (a check of the title records to ensure that the seller is the legal owner of the property and that there are no liens or other claims outstanding)
- Title insurance (to protect the lender and/or the buyer against loss arising from disputes over ownership of a property)
- A municipal lien search (to determine that there are no outstanding legal claims against the property that must be paid when the property is sold)
- Credit report and a certified plot plan
What other costs are paid at closing?
- A full year insurance binder
- Recording fees and transfer charges
- Any prepaid interest due on the mortgage for the month in which you are closing the loan. You must also pay the first year's premium for mortgage insurance, unless you have chosen to finance on a monthly basis.
You will be asked to sign several documents at closing. For a reference of the forms you will have to sign at closing, click the link below: