When you purchase or refinance a home, the last step in the process is called the closing. This is when you finalize all the details of the transaction. Knowing what’s expected of you and understanding key homebuying terms can make the process smoother.
The six steps of your closing
You’ve made it through the application process and have a closing date. Your mortgage closing will likely be held at the office of the title company, an attorney or the lender. You’ll want to bring copies of any paperwork you received or signed throughout the homebuying process, as well as two forms of ID and the payments you will make. Here’s what happens during the closing:
Quick tip
Make sure you understand the terms of each document. If something is different from what you expected or agreed to—say, for instance, your Closing Disclosure is significantly higher than your Loan Estimate—don’t sign until you resolve the discrepancy.
What you pay
Along with any down payment or other prepayments related to your home purchase, you’ll likely pay closing costs, which usually total between 3 and 5 percent of the loan amount.
You should first get a sense of how much your closing costs will be from the Loan Estimate your lender provided you within the first three days after you submitted your application. When your loan is approved, and at least three days before closing, you should receive a Closing Disclosure, which lists your finalized closing costs.
You may pay some fees noted in your Loan Estimate and Closing Disclosure before closing, such as those associated with credit reports. For the rest, ask your closing agent what payment methods are acceptable.
Use Bank of America’s closing costs calculator to estimate your costs.
Who else attends your closing?
Buyers
- Your attorney (if you have one)
- A lender’s representative
- Your real estate professional
- The closing agent (usually a title company representative)
Buyers
- The seller’s attorney (if they have one)
- The seller’s representative
- The seller’s real estate professional
- A notary public
How long does it take to close on a house?
Closing day typically happens four to six weeks after you sign the sales and purchase contract, though it may take longer. The closing process itself may take several hours.
Once all the papers are signed, you’ve secured your mortgage and the closing is officially complete, you’ll receive the keys to the property. Be sure to store all of the documents you received during the closing in a safe place. You can also now change your address, meet your new neighbors and move in.
5 tips to avoid closing delays
If you’re concerned about closing costs adding up, there are steps you can take to help ease some of the burden. In addition to shopping around for insurance or negotiating attorney fees, keep these strategies in mind:
1
Check documents for errors.
2
Allow enough time for money transfers and for the loan to close.
3
Handle home repairs in advance.
4
Make sure the title is clear.
5
Don’t make significant changes to your finances, such as buying a car or opening a new credit card, before you close.
When you make the first payment
Now you’re ready to move in, but you still have a little more planning to do. During this period, about 15 days after close, it’s important to understand how to make your first mortgage payment on time.
Depending on your loan, you may have made a one-month mortgage payment during your closing, and learned when to make your next payment. You probably also learned about the option to set up automatic ACH mortgage payments at closing (so named for the Automatic Clearing House Network that processes the payments).
One of the digital choices for paying your mortgage, ACH payments are automatically withdrawn from your bank account. It’s one way to make sure you’re never late on a mortgage payment. You can choose the date the payment will come out of your account each month, and you can set up mobile and online alerts so you have no surprises as you make your house into a home.