"Clear to close."
These are the three most welcome words when it comes to buying a house. When loan underwriting utters that magic phrase, loan officers, buyers, and real estate agents heave a deep sigh of relief. The deal is done. This means no more papers to sign, no more prying questions, no more spending your nights tearing the house apart to find obscure documents, and no more being a renter.
But the deed is not officially done. You still have to grab your blue pen and get ready to sign on a lot of dotted lines. Take a look at what you can expect to happen during the process.
Getting to the Closing Table
Before you get to the finish line and sign your closing papers, though, think about how you got there, starting with your initial loan request.
Your main job during the time your loan is still in underwriting is simple. Move as quickly as you can to honor document requests, answer questions, and do anything else that is needed to get you to the closing table. No matter how silly you think the doc request is, you just have to jump through the hoops as fast as you can.
Your Closing Disclosure
You have no doubt seen a blizzard of mortgage disclosure documents since you started the closing process. You've been given initial disclosures and then redisclosures. The sheer volume of paper can easily make first-time buyers dizzy.
Closing Disclosure Changes
Closing costs, escrow amounts, interest rates, and cash to close are all added to your closing disclosure. This will look a lot like your initial loan estimate. You'll want to compare these two documents to see what has changed since your first estimate.
It is common for property taxes and home insurance to be shown at the wrong price on the estimate. That's because these final amounts depend on exact quotes from your insurer or the most recent tax valuation from your property tax assessor.
Other costs that can change from your first loan estimate to the closing disclosure include:
- Prepaid interest totals.
- Initial escrow account deposits.
- Fees for third-party services that the lender does not require.
- Recording fees (by a maximum of 10%).
- Fees for certain required services if you chose a third-party provider from the lender’s approved list of providers (by a maximum of 10%).
You could also see some costs change if you took out more credit (say, for a car loan) since your initial estimate or your credit changed in some other way. The amounts on your closing disclosure will be close to the loan estimate, but there could be some big changes, and those costs can add up.
The three-day period before closing is your last chance to review these costs and follow up with your lender if you have any issues.
Who Will Be at the Closing Table?
The exact setup of your mortgage closing will depend on your state's laws and how the parties involved handle the process. In some cases, you may even be able to close remotely, without ever setting foot in the title office.
On closing day, you'll meet with any or all of these parties:
- Your real estate agent and the seller's agent.
- The seller.
- A person from your title company.
- Someone from the escrow company.
- Your attorney or the seller's attorney (if your state requires this or you request it).
- Your lender.
Signing Your Closing Documents
Once all parties are together (if your state requires this), you'll need to be ready to do a lot of signing and, of course, hand over your cashier's check to pay your down payment and closing costs. The docs you sign at the closing table should mirror your final set of mortgage disclosures (and should be fairly similar to your original set of disclosures too). Someone will guide you through each document, explaining what it means, where to initial, and where to sign.
Expect to sign or initial at least 50 pages of documents with your legal name.
Once the closing docs are signed by both you, any co-signers on the loan with you, and the seller, they will be faxed or scanned to your lender's closing department. In some cases, these docs are needed prior to funding your loan and paying the seller. In other cases, the funds have already been wired and are waiting with the closing docs.
Once the papers are signed and the loan is funded, you are officially a homeowner. Your agent will hand over the keys and you can go check out your new home.
Frequently Asked Questions (FAQs)
How much are closing costs for a home?
Closing costs for the buyer typically run between 2% and 7% of the cost of the home.
How long does a house closing take?
It takes about 45 days to close on a house, on average. Federally related mortgages may close quicker. Any issues with the underwriting process can delay the closing time.
How soon can I get a car loan after closing on a house?
You can apply for a car loan as soon as your mortgage is finalized unless your mortgage says otherwise. Some lenders may want borrowers to wait before taking on new debt, but those conditions will be detailed during the closing process.