At Last, Closing

On closing day, all parties sign the papers, officially sealing the deal. Ownership of the property transfers to you. It's your opportunity to make any last-minute changes to the deal.

The day before closing, be sure to gather all the paperwork you have received throughout the homebuying process: loan estimate, contract, proof of title search and insurance if necessary, flood certification, proof of homeowners insurance and mortgage insurance, and home appraisal and inspection reports. You might need to refer to these documents at closing.

Most home sale contracts entitle you to a walk-through inspection of the property 24 hours before closing. This is to ensure that the seller has vacated the property and left it in the condition specified in the sale contract. If there are any major problems, you can ask to delay the closing or request that the seller deposit money into an escrow account to cover the necessary repairs.

At closing, your participation will be twofold:

Sign legal documents. This falls into two categories: the agreement between you and your lender regarding the terms and conditions of the mortgage, and the agreement between you and the seller transferring ownership of the property. Be sure to read all documents carefully before signing them, and do not sign forms with blank lines or spaces.

Pay closing costs and escrow items. Borrowers handle the numerous fees associated with obtaining a mortgage and transferring property ownership in one of two ways. Either they roll them into the principal balance of the new loan or they agree to pay higher interest rates and have their lenders foot the bill. Some buyers may have to pay these out-of-pocket fees.

Who Is Present at Closing?

Closing procedures vary by state (and even by county), but the following parties will generally be present at the closing or settlement meeting.

• Closing agent, who might work for the lender or the title company.
• Attorney. The closing agent might be an attorney representing you or the lender. Both sides may have attorneys. It's always a good idea to have an attorney present who represents you and only you.
• Title company representative, to provide written evidence of the ownership of the property.
• Homeseller.
• Seller's real estate agent.
• You, also known as the mortgagor.
• The lender, also known as the mortgagee.

The closing agent conducts the settlement meeting and makes sure that all documents are signed and recorded and that closing fees and escrow payments are paid and properly distributed.

Closing Documents

You will receive the following important documents.

Closing Disclosure. A five-page form that provides final details about the mortgage loan you have selected. It includes the loan terms, your projected monthly payments, and how much you will pay in fees and other costs to get your mortgage (closing costs). The lender is required to give you the Closing Disclosure at least three business days before you close on the mortgage. This three-day window allows you time to compare your final terms and costs to those that were reflected on the Loan Estimate. The three days also gives you time to ask your lender any questions before you go to the closing table.

Final TILA statement. You received the first version of this statement after applying for your mortgage. This final version outlines the cost of your loan and APR and takes into account any modifications made to your rate and points between application and closing. Make sure that everything is in order.

Mortgage note. This document states your promise to repay the mortgage. It indicates the amount and terms of the loan, and what the lender can do if you fail to make payments.

Mortgage or deed of trust. This document secures the note and gives your lender a claim against the home if you fail to live up to the terms of the mortgage note.

Certificate of occupancy. If you are buying a newly constructed house, you need this legal document to move in.

Once you've reviewed and signed all closing documents, the house keys are yours and you will have bought your new home!