What to Expect At Mortgage Closing Day for Your Home

Buying a home is the biggest single financial transaction that most people will make over the course of their lives. Even if you’ve never gone through the process before, many of the steps are going to make sense right away; you figure out how much you can afford, look for homes in your price range and negotiate an acceptable price with the seller.

But what should you expect on the “closing day” – the day on which the home actually becomes yours and you put yourself on the hook for your mortgage? While the closing process isn’t particularly complicated it can be a bit overwhelming for people who aren’t familiar with some of the steps.

Here’s an overview of what you should expect on mortgage closing day for your new home.

• Have All Outstanding Issues Resolved. Ideally, your closing day should be a bit anti-climatic in that all you’ll have to do is sign a lot of contracts and other documents. If something comes up late in the process, contact the other side (or their broker) and do everything you can to resolve all issues prior to the closing date.
• The Closing Documentation. The closing will involve a surprising amount of paperwork, including the final documents relating to the title search, the loan documentation and the settlement sheet.
• Title Search and Title Insurance. By the time of closing, your title search and title insurance coverage should be complete. A title search is the process of reviewing property transfer records to make sure that the seller actually has the right to sell the property, and that there are no undisclosed liens, easements or other restrictions on the property. Title insurance is simply a specialized insurance policy that protects a new buyer against any problems that exist with the title but which weren’t discovered during the title search.
• Settlement Sheet. Given the large number of documents and payments that go back and forth between the buyer, the seller, the buyer’s lender and the seller’s lender or lenders, it’s easy to become confused without something to help keep track of them all. Thankfully, the settlement sheet does exactly that. The settlement sheet is a standard form that itemizes all of the fees and charges that are associated with the closing. It is customary that the buyer’s lender will prepare a draft or estimated settlement sheet so that the buyer can reasonably anticipate the full financial implications of the closing. Again, the idea is to plan for and anticipate what will happen at closing so that there will be no significant surprises.
• The Final Step. Once all of the necessary documents are signed, you’ll receive the keys to your new home, as well as a binder containing all the final documents for the transaction.

Ideally, the closing day for a new home purchase should only be exciting because of the outcome. But there shouldn’t be any surprises or excitement because of the process itself. Spend the necessary time to prepare yourself for closing so that everything goes smoothly.