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What to Expect at a Real Estate Closing as a Buyer

You have reached an agreement with the seller for a property. However, the transaction is not complete. The closing is the final phase in the home buying process. You feel that you are so close yet so far away from owning your new home. Under the guidance of your real estate agent, you anxiously complete the steps in preparation of the closing.

1. Both parties sign a sales contract prepared by your real estate agent. The sales contract includes the common and legal description of the property, all contingencies, inspections and warranties, costs and fees, home insurance, and the possession date.
2. You make the formal application for the mortgage with your approved lender.
3. A closing date is set.

The documents associated with the closing are:

• HUD-1 Settlement Sheet
  The HUD-1 Settlement Sheet itemizes the services provided in the real estate transaction and the charges to the parties.


• Truth-in-Lending (TIL) Disclosure
  The TIL disclosure outlines the terms of the mortgage loan. This would be the loan amount, loan costs, annual percentage rate (APR), finance charges, payment amount and the total number of payments. The initial TIL disclosure is mailed to you within three days of the mortgage application. The lender must provide you with a final TIL disclosure just prior to or at the closing. The final TIL will indicate any changes in the APR calculations after the initial loan application.


• Deed of Trust or Mortgage
  The Deed of Trust or mortgage conveys the lien on your property as security for repayment of your mortgage loan. If you default on the loan, the lender has the right to foreclose and take possession of the property.


• Note
  The promissory note represents your promise to pay the lender according to the agreed terms.

Prior to the closing date, you should:

Review all of the documents.

Go over the final closing statement or the HUD-1 statement for accuracy. Recheck the math calculations. Double check the fees and costs associated with the transaction itself and the closing. The general closing costs and fees associated with a real estate transaction are:

• Additional state or local taxes, including property taxes
• Administrative fees
• Application fees
• Appraisal fees
• Attorney fees
• Closing company fees
• Credit report cost
• Escrow company fees
• Flood insurance, if required by law
• Future interest payments, depending on the loan terms
• Homeowner's insurance
• Insurance
• Loan origination fees
• Mortgage fees
• Other professional fees
• PMI
• Points
• Recording fees
• Survey fees
• Title fees
• Title insurance
• Title transfer fees

Make sure that the legal description of the property is correct in all of the documents. Make sure that all items have been removed that you did not agree to. Verify that the way you want to take title to the property is correct. This will save you time, money, and headache later. Read the guarantee of the title insurance. Make certain that all the conditions of the purchase agreement have been met. Do a final walk-through of the property with your real estate agent.

The Closing

The big moment has arrived! The closing is held with an attorney approved by your lender. The definition of a closing attorney and who can serve as a closing attorney will vary by state. Generally, the buyer, seller, and the respective real estate agents are also present at the closing. The settlement statement is signed, closing costs are paid, and you hand over the certified check prepared by the mortgage lender. In exchange, you are given the keys to the house and officially announced as a homeowner! Congratulations!

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