Closing
Closing is the final step in a mortgage transaction where ownership of the property transfers from seller to buyer. During closing, all loan documents are signed, funds are disbursed, and the deed and mortgage are recorded with the local government.
What This Means
What Happens at Closing
The closing (also called settlement in some states) is a formal meeting where the borrower signs all final loan documents, pays closing costs and any remaining down payment funds, and receives the keys to the property. The process typically involves a closing agent, title company representative, or attorney depending on state requirements. Key documents signed at closing include the mortgage note, deed of trust or mortgage, and the closing disclosure.
The Closing Disclosure
Federal TRID regulations require lenders to provide the Closing Disclosure at least before the scheduled closing date. This document itemizes all final loan terms, monthly payment amounts, closing costs, and cash required to close. Borrowers should compare the Closing Disclosure to the Loan Estimate received earlier in the process and flag any significant changes.
Closing Costs and Funding
At closing, the borrower must bring funds to cover:
- Down payment minus any earnest money already deposited
- Closing costs including lender fees, title fees, prepaid items, and escrow reserves
- Prorated property taxes and insurance
Total closing costs on a home purchase typically range from of the loan amount. Funds are usually required as a cashier's check or wire transfer. After signing, the title company or closing agent records the deed and mortgage with the county, officially completing the transaction.