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Closing on a Home

What to expect

Young smiling couple signing contract on the couch in the office

Real estate transactions are infinitely more complicated than most other types of sales, especially in the United States. Once a seller accepts an offer from the buyer, several things must happen. Lawyers representing both parties must review the contract, lenders must give the mortgage loan final approval, and a title company must complete a title search to ensure there are no liens against the property being sold. Once all of this work is complete, ownership is transferred from the seller to the buyer during a home closing.

So what really happens during a home closing, and what should you expect if you're attending one? Take a look.

Who Attends?

Usually, a closing is run by either a real estate lawyer or by a representative of a title company. This person is meant to be neutral, which helps ensure both buyer and seller are treated fairly at closing. In some states, only the buyer attends the closing; the seller has already provided all of the information and documents needed to their attorney. In other states, both buyer and seller attend the closing. In summary, a closing will generally be attended by:

• The buyer
• The buyer's attorney
• The seller
• The seller's attorney
• A title company representative
• A representative of the lender/mortgage agent
• The real estate agents representing both buyer and seller

Again, there is some variation from state to state. For instance, in some states, real estate agents are not required to attend the closing.

What Happens on Closing Day?

Most of the "work" involved in a real estate transaction occurs before the closing date. This is one reason why closing dates are always getting pushed and rescheduled. If one aspect of the transaction gets held up, the rest of the process gets held up. The closing day is a finalization of all the work that has been done in the previous 4-6 weeks.

Here are the major steps that take place at a closing meeting:

1. The buyer pays the remaining closing costs.
This includes the down payment, any property taxes that the municipality requires upfront, attorney's fees, and title search fees. Generally, the buyer will provide these funds in the form of one big cashier's or bank check to the closing agent, who will make sure the funds are distributed as intended.

2. The seller signs a property transfer document.
In states where sellers do not attend closing meetings, this will be done beforehand, and the signed document will be handed over to the seller's attorney.

3. The buyer signs mortgage paperwork.
There are several mortgage documents that the buyer must sign at closing. These include a mortgage note that serves as a promise to repay the loan, a deed of trust to secure the loan, and a settlement statement summarizing all costs associated with the transaction.

4. The title company issues a new deed.
Once all mortgage paperwork is signed, the title company will issue a new deed in the buyer's name. Once this step is completed, the home officially belongs to the buyer. Keys will be transferred, and the buyer will be given access to the home.

The closing date is what everyone waits for in a real estate transaction. There's a lot of work required in the weeks leading up to this meeting, but the home closing itself should be fairly straightforward—with a lot of signing of paperwork!

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