Closing day is the day the homebuyer and the seller complete the legal transfer of the house. Once the closing process has been completed, the keys to the house are given to the buyer.
Present Homeowner’s Insurance Receipt — The buyer gives the lender a receipt to prove that homeowner's insurance has been obtained for the property.
Review HUD–1 Settlement Statement — The closing agent will review the HUD–1 settlement statement with the buyer and seller to verify that the agreed upon dollar amounts have been entered and, if so, have the buyer and seller sign the form.
Present Closing Costs Check — The buyer and the seller give the closing agent certified checks to cover the closing costs.
Review All Other Documents — The closing agent will have the buyer and seller review and, if correct, sign all remaining documents that are part of the closing process.
Establish an Escrow Account — The closing agent will establish an escrow account for the buyer to cover property tax, homeowner’s insurance, interim interest, and possibly private mortgage insurance.
Execute Mortgage Documents — The buyer reviews and signs all of the documents required by the lender, the most important of which are the note and security instrument (either a mortgage or a deed of trust).
Present Mortgage Check — The lender gives the closing agent a check to cover the mortgage amount.
Receive Title to the Property — A warranty deed is given to the buyer, signed by the seller.
Receive Keys to the Property — At the conclusion of the closing process the buyer will receive the keys to the home. These keys should be temporary – it is common practice to replace all the locks on the home to prevent anyone with duplicate keys from entering the home. The seller may also provide the buyer with documents such as instructions and warranties for appliances and other major components that are part of the home.
Record Legal Documents — The recording process is the final step in the closing process. The escrow/closing company, attorney, or title company that handles your transaction will complete the recording. The process officially records certain documents such as the warranty deed and the security instrument.
Paper work to be signed –
On closing day you will have a series of closing papers to sign. It is important that you review each of these documents with your real estate agent or attorney before signing them.
Real Estate Settlement Procedures Act (RESPA) — Statement that acknowledges that you have been informed about how the closing process works, and that you fully understand all the closing documents and financial obligations related to your mortgage.
Truth in Lending Disclosure Statement (TIL) — Final statement that requires lenders to disclose all the actual terms and conditions of the loan. The final disclosure statement makes any corrections to the preliminary Truth in Lending Disclosure statement you received when you applied for the loan.
HUD–1 Form (Settlement Statement) — Standard settlement statement developed to comply with Real Estate Settlement Procedures Act (RESPA). The form itemizes each payment made by the respective parties in the transaction.
sample HUD–1 Form and in PDF format
detailed explanation of
Mortgage Note — Buyer’s commitment to repay the mortgage. The note stipulates terms for the loan including the loan amount, interest rate, address to send payments, maturity date for mortgage, frequency of payments, and the change dates for adjustable rate mortgages.
Security Instrument (Mortgage or "Deed of Trust") — Pledge of the property as security for the loan. The document stipulates the same basic debt information that is found in the note and is recorded.
Warranty Deed — Legal document that transfers the title from the seller to the buyer. The deed identifies the name of the seller as the grantor and the name of the buyer as the grantee.
Other Documents — Depending on local laws and customs other documents may be used in your closing process. On the next page are some of the more common documents used.
