Closing on a house, the day when you sign official documents to make the house yours.

You’ve made an offer on a house; the seller accepted your offer, you’ve finished with inspections, appraisals, and all of the other nitty-gritty required to buy a house.

And so finally, the day has arrived, the day when you sign the paperwork to make the house officially yours.

But don’t count your chickens just yet. This last step still can have some unexpected pitfalls and issues if you don’t have everything that you need in place.

Be prepared so that your day can be filled with excitement instead of frustration.

What is closing?

Closing is the very last phase of the home buying process, which culminates on closing day – the last step to sign all of the paperwork and officially transfer the property from the seller to the buyer.

The closing process begins when an offer to buy a house is accepted. 

This sets in motion all of the other steps that have to be completed in order to reach closing day.

These steps on average, take about 30 days.

During the home buying process, the property will go through an inspection and appraisal, and the buyer will obtain documentation needed for the loan, and insurance for the house.

Both buyer and seller should actively stay on top of deadlines and communicate with their realtors to ensure this part of the process goes smoothly and without delay.

Once both parties have completed all of the necessary steps, they can go into closing.

Even though the closing date might be scheduled on the contract when the seller and buyer accept the offer, that date isn’t set in stone. It can be changed based on the amount of time that it takes to finalize all these other steps, as long as both parties agree.

Where does closing happen and who attends?

Often in California, the closing will take place at an escrow company as a neutral third party. The escrow company helps collect all of the documents and holds any money needed for the transaction.

Sometimes closing might happen at another neutral location of the parties choosing, like a title office or mortgage office.

The people in attendance usually are the buyers, their respective agents or realtors, and a notary. 

On occasion, the seller might sign necessary paperwork ahead of time and therefore would not attend the closing in person.

The mortgage loan officer might also be in attendance though this can vary.

What documents are signed?

First-time buyers are usually shocked at the stack of paperwork that’s part of closing.

They may finish the day with upwards of 100 papers relating to the purchase of a new home.

Some of the most important documents that the buyer will sign and receive include:

  • Promissory note. This is essentially a promise that the mortgage will be paid.
  • Mortgage contract or deed of trust. An acknowledgement that the home will act as collateral if the mortgage cannot be paid. In other words, the bank will then repo the home.
  • Escrow disclosure. This document itemizes what payments will be made to escrow from the mortgage on a monthly basis and when property tax will be paid.
  • Grant deed. This document officially transfers the title from the seller to the buyer
  • Loan application. A copy of the application will be included in the paperwork that details the information about the mortgage payment.

At the end of closing, all of these documents should then be bound together and presented to the buyer in a very, very heavy file.

The seller will also receive a stack of paperwork and documents, but their stack will be a bit lighter because they won’t be taking out a mortgage.

Note: The seller doesn’t receive any documentation that has the buyer’s personal data on it, like social security numbers, employment, mortgage information.

What should you bring to closing?

After going through all of the other steps in buying a home, you don’t want to be delayed by forgetting to bring a document or piece of paperwork.

  • Identification. One of the most important items you’ll need is a photo ID such as a driver’s license or passport. Without an ID, the closing docs can’t be signed. The notary needs to be able to verify your identity in order to sign. The ID must be current. If you have an expired ID, please talk to the escrow or title officer to find out if it is acceptable.
  • Closing disclosure. You should receive this a few days before closing in California. This gives you an idea of what you’ll be paying at closing and what amount you’ll need for your cashier’s check.

The fees at closing are usually less than what is disclosed during the loan process. This is normal. Some fees are estimated high as a worst-case scenario during the process.

Depending on the situation some fees can increase, usually the prepaid fees which is based on when the closing happens. If the closing date is delayed the prepaid interest could increase.

  • Cashier’s check. Unless you send the money via wire transfer ahead of time, you’ll need a cashier’s check to certify that you have funds to cover the down payment, and buyers closing costs.

Confirm with the escrow / title agent the amount needed for closing.

If you are drawing funds from an account with a bank or credit union, that’s the best place to get a cashier’s check.

There may be a small fee associated with it, but some banks will provide this service free of charge.

The title company may require you to wire the funds instead. Make sure you check with them to find out what’s an acceptable form of payment.

  • Your agent or a lawyer. While not required, your agent will be able to walk you through the steps and can answer questions as you go.

First-time buyers, in particular, may find it very helpful to have someone answer questions. It’s extremely important not to sign without fully understanding the meaning behind the documents.

  • Patience. Because the average closing takes between 90 minutes and two hours, be sure you’re mentally prepared. Some closings take even longer, particularly if there are any snags in the process.

Take all the time you need to read and understand every document that you’re signing. And if you require reading glasses, be sure to bring those too so that you can see what you’re signing.

Once you’ve finished this last hurdle, your home buying process is complete, and you can advance to the next step of moving, unpacking, and finally enjoying your new home.

Related: Closing Costs – How Much are Costs & Who Pays Them?

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