Purchasing a house can be a long, wild ride, and by the end, you just want to get into your new place and start arranging your furniture. But buying a house is a multi-step process that takes time. The very last step in the process is the closing or settlement date. Although different people use different terms, the "closing" or the "settlement" refers to the same finalization of your home purchase.
At the closing or settlement date, the seller receives the sale proceeds, and the buyer pays any required expenses to close the transaction, known as closing costs. Usually, the settlement process takes as little as a few hours. If it is a complicated transaction or there is a disagreement over the final paperwork, it could take several days.
What to Bring With You
Since no two closings are exactly the same, make sure to ask your attorney or mortgage broker for a checklist of items to bring. Usually, your attorney or mortgage broker will already have a list prepared in advance that they will give you well ahead of time.
Make sure to bring all of the paperwork generated during the selling or buying process. This includes the sales contract, proof of homeowners mortgage and flood insurance with proof of payment, your appraisal and the survey and inspection reports, especially termite inspection. Bring the mortgage contract and good-faith estimate. Each of the new owners of the property needs to be present to sign the required documents.
Your attorney will also let you know what costs you will need to pay at closing and how they can be paid, usually with a cashier's check or money order.
What You Can Expect
The most realistic expectation you can have of closing and settlement is paperwork, lots and lots of paperwork. The attorney you used for your purchase will have already reviewed the documents, but ask for explanations of any fees or documents that you don’t understand. Your attorney is there to answer your questions and guide you through the process. Closing and settlement is the last time to ask these questions before you legally own the home.
Occasionally, there may be additional costs added at the last minute that may need further explanation or the interest rate on the mortgage papers might need adjusting. In the end, you will have a final agreement that everyone has signed on to, and you will officially own your home.
Finalizing the Calculations
At closing, you will look at the final calculations and divvy up any unresolved expenses. Unresolved expenses are common where the previous owner had already paid property taxes for the year and you are responsible for reimbursing the seller for taxes paid from the date of closing until year-end. Likewise, if the seller has not paid property taxes up to the closing date, the seller will owe you money.
Further, any results of safety inspections or walk-throughs may affect the final selling price. For example, you may see additional costs you will have to bear for needed repairs where the seller has agreed to reduce the selling price rather than make the repair.
After the Closing and Settlement
After closing and settlement, make sure to get copies of every single document. When you leave, be sure to take all of your closing documents and immediately place them in your safe deposit box. These documents should include copies of every mortgage document that you signed, a copy of the title report, the land survey and appraisal. While the original deed will be recorded at the local clerk’s office, you will receive a copy for your personal files, and it's important to keep all of these documents together so that you can prove you own the home.
Finally, if you are the buyer, be sure you have all of the house keys in hand when the meeting is done.
Bea is a personal finance and legal writer based in Texas.