The Closing

The closing phase gets started after you and the seller have signed the purchase agreement. The closing agent as specified in the purchase agreement will work to prorate the property taxes, have a title report prepared, arrange the title search, prepare instructions for the buyer and the seller for paying final closing costs, schedule the closing meeting, disburse all funds, and have the deed, which is the document that pass title from the seller to the buyer, recorded with the county.

During the closing phase, the buyer will work with the lender to receive actual quotes for their mortgage. Lenders require that the buyer purchase a homeowner’s insurance policy, also called hazard insurance, and possibly additional coverage in certain regions for events such as hurricanes, floods, and earthquakes. The buyer must have proof at closing that their policy is in effect and paid for 12 months, so to prevent any delays at closing, it is good to apply for homeowners insurance as soon as possible to provide the buyer ample time to shop different companies.

On closing day, the buyer will have to pay the down payment and closing costs including title insurance. Title insurance is a one-time cost that protects the buyer by making the insurance company liable for certain claims against their ownership. All closing cost will be stated on the HUD 1 settlement statement which lists the buyer’s and seller’s closing costs in an itemized way so the buyer will know how much money to bring to closing and where the money is going towards.

The closing can last as little as a half hour, although it may take longer depending on if there are any errors in the documents or money amounts. The buyer will choose how they would like to take title to their new home which can be as a sole owner, joint tenancy which provides for right of survivorship, or tenants-in-common which are independent owners with unequal shares that can be sold independently. Once all the paper work is signed and processed, the buyer will be given the keys to their new home, but hopefully, the buyer has remembered to set up their utilities!