What Happens at Closing

Closing day is the day the homebuyer and the seller complete the legal transfer of the house. Once the closing process has been completed, the keys to the house are given to the buyer.

Present Homeowner's Insurance Receipt - The buyer gives the lender a receipt to prove that homeowner's insurance has been obtained for the property.

Review HUD-1 Settlement Statement - The closing agent will review the HUD-1 settlement statement with the buyer and seller to verify that the agreed upon dollar amounts have been entered and, if so, have the buyer and seller sign the form.

Present Closing Costs Check - The buyer and the seller give the closing agent certified checks to cover the closing costs.

Review All Other Documents - The closing agent will have the buyer and seller review and, if correct, sign all remaining documents that are part of the closing process.

Establish an Escrow Account - The closing agent will establish an escrow account for the buyer to cover property tax, homeowner's insurance, interim interest, and possibly private mortgage insurance.

Execute Mortgage Documents - The buyer reviews and signs all of the documents required by the lender, the most important of which are the note and security instrument (either a mortgage or a deed of trust).

Present Mortgage Check - The lender gives the closing agent a check to cover the mortgage amount.

Receive Title to the Property - A warranty deed is given to the buyer, signed by the seller.

Receive Keys to the Property - At the conclusion of the closing process the buyer will receive the keys to the home. These keys should be temporary — it is common practice to replace all the locks on the home to prevent anyone with duplicate keys from entering the home. The seller may also provide the buyer with documents such as instructions and warranties for appliances and other major components that are part of the home.

Record Legal Documents - The recording process is the final step in the closing process. The escrow/closing company, attorney, or title company that handles your transaction will complete the recording. The process officially records certain documents such as the warranty deed and the security instrument.