What First‑Time Homebuyers Should Know About the Closing Process

In the home-buying process, closing is the final step to get a mortgage. When you close, you sign the documents to take ownership of a property and receive the keys. Buyers who have gone through this process before are prepared and know what to expect, but for first-time buyers, it may be daunting.

The team at Sutton & Lovette Law Offices is committed to providing our clients with the information they need to understand how the closing process works from start to finish. The actual signing process can take about an hour, but there are things you should bring to your appointment. Read this week’s blog to learn what to expect when closing on a residential property. 

Understand Your Documents

There is a lot of paperwork involved in closing on a property, no matter the type. Keep track of your documents as you send them where they need to go. Note the dates of both when you send these documents and when they are received. A list of these documents includes…

•  Closing disclosure: Details of key information regarding your loan

• Seller’s disclosure: List of any known problems with the property

• Title documents: Verifies the seller’s ownership and are reviewed to ensure they can be transferred to you to declare ownership

• Loan application: A copy of the original loan application for closing

Keeping these files organized makes the process immensely easier for you in the long run. This preparedness can help prevent delays in the process and help you remain on your desired timeline. 

Get Your Finances In Order

Your Closing Disclosure will tell you the exact amount of money that you need to bring with you to your final closing day. Besides that, there are a lot of expenses that must be set in order before this day, including those that are not your responsibility. These include…

• Closing costs: these are paid to your loan lender and different third parties. Including about 3%-6% of the home's final purchase price, these cover the appraisal, origination, title insurance, etc.

• Earnest Money: Deposit that is held in escrow and applied to your down payment that shows you are committed to purchasing the home

• Lender Credits: Provided by your loan lender that helps cover up-front costs, often in exchange for a higher interest rate

• Cash to Close: The total amount required at closing which includes your down payment and closing costs 

• Dry Closing: Type of closing where funds are disbursed after the event

• Seller Concessions: Agreements made by the seller to cover a portion of closing costs

Review the Closing Disclosure Form

Preceding your scheduled closing, you will receive a final Closing Disclosure. This document tells you what your loan terms are including…

• The lean amount

• Your interest rate

• Monthly payment

• The type of loan

• The amount of funds you need day-of to close (closing costs and down payment)

The Closing Disclosure differs from your loan estimate that you received earlier in your home-buying process. This document prepares you for the final closing day and ensures that there will be no surprises at the final meeting. 

Prepare for Your Walkthrough

After the seller vacates the home, and before the final closing day, you will be able to have a full walkthrough of the property or home that you are buying. This walkthrough is your last chance to check the condition of the home before ownership is transferred to you. This process should be taken slowly and with care. Look into all of the rooms, appliances if they are included, HVAC systems, plumbing, electrical, etc. If the seller agreed to fix certain things before you buy the place, make sure these things are done and up to your standards. 

Come Prepared to Closing

You should arrive at your closing appointment with the appropriate paperwork and documents. You will need to provide…

• Driver’s license or another form of ID

• Your down payment (either in the form of a check or have completed a wire transfer previously)

• Your Closing Disclosure to compare with the final paperwork

• Proof of homeowner’s insurance

• Patience (closing is not a quick process)

The last step to closing on a property is initialing and signing. The agent that you work with will provide you with these documents and once everything is square, you will be given the keys to your new home. 

The Bottom Line on Closing

Usually, closing a home takes anywhere from 30 to 45 days. This starts when you submit the application for your mortgage to when you sign the final paperwork. This month or so of your life doesn’t have to feel crushingly overwhelming. When you understand the process from start to finish, it is so much easier to stay on your timeline and avoid any road blocks along the way. Knowing exactly what documents to complete and when to send them to their respective parties helps you avoid delays and make the experience more enjoyable. 
Are you ready to take the first step toward homeownership? The trusted attorneys at Sutton & Lovette are here to help you along the way and provide you with legal counsel at every step. Start your mortgage application today and give us a call at (814) 471-7702!