What Actually Happens During the Closing Process?

The closing process is the final step in purchasing a home, but for many buyers, it can seem like a mysterious experience. In reality, closing is a well-organized series of events that, when understood, can help alleviate stress and ensure a smooth transition to homeownership. Let's demystify the closing process and explore what actually happens during this crucial phase of your real estate journey.

Pre-Closing Preparations

Before the official closing day, several important steps take place:

1. Final walk-through: Buyers typically conduct a final walk-thru of the property to ensure it's in the agreed-upon condition.

2. Document review: Both parties review numerous documents, including the closing statement, title commitment, and mortgage papers. It’s possible to pre-sign some lender documents at this stage, which can be advantageous to speed up closing day.

3. Funds preparation: Buyers arrange for the transfer of closing costs and down payment funds. This can be in the form of a cashier’s check or an electronic transfer.  Personal Checks are only accepted for amounts under $1,500.00.

The Waiting Game

The closing process—from “contract signed” to “keys-in-hand”—takes an average of 43 days. Most of the time you’ll spend waiting depends on buyer financing, because that’s the part that takes the longest to come through. Once that’s ready and approved, you’ll move to closing day.

Closing Day

On the day of closing, several key events unfold:

Meeting of Parties

The buyers and sellers, along with their respective real estate agents, sit down with the escrow agent (usually at the title company, but other arrangements can be made for absentee signers and off-site meetings). In our market, it is customary for buyers and sellers to close separately. This is primarily due to the number of documents each party has to sign. Buyer-side closings usually takes 45-60 minutes, while seller-side closings only last 20-30 minutes.  

Document Signing

This is the heart of the closing process. Each party will sign a multitude of documents, including:

• The closing statement (detailing all financial transactions)

• Mortgage documents

• Warranty deed

• Affidavits and declarations

Lender Approval

The escrow officer scans and emails the required documents to the buyers' lender. The lender reviews the documents to verify they are completed and issues a funding number.  

Funds Transfer

The lender confirms that the title company has received the loan funds or initiates the wire. The buyer provides a cashier's check or initiates a transfer for the remaining balance of the home's purchase price and closing costs.  

Property Transfer and Disbursement

Once the title company is in receipt of the funding number and all funds from the lender and buyer, the loan is considered "funded" and the ownership of the property transfers. The closing agent distributes the funds according to the closing statement, paying off the seller's existing mortgage, real estate commissions, and all other fees.

Key Exchange

Once all documents are signed, and funds are transferred, the seller hands over the keys to the property, along with any other relevant items like garage door openers or security codes.

Post-Closing Activities

After the closing meeting, a couple final steps occur:

1. Document recording: The closing agent files the new deed and mortgage documents with the local government.

2. Title transfer: The title company registers the change in ownership.

3. Move in: You’re ready to move into your new home. Congratulations!

In conclusion...

While the closing process involves numerous steps and can seem overwhelming, understanding what to expect can help you navigate this final stage of your home purchase with confidence. Remember, your real estate agent is there to guide you through each step, ensuring a successful and exciting transition into your new home.

Buying or selling and want some help from an expert? Get in touch.