5 Steps For Closing On A Home

Steps For Closing On A Home

Whether you are a first time home buyer or someone who did it a while ago, closing on a home can be a daunting task. No matter where you are in the process it helps to be organized. Sellers prefer buyers that move fast, and until a deal is finalized it’s in their best interest to keep showing the property.

For first-time home buyers, closing costs can be a big, unexpected expense. Closing costs are usually 3-7% of the sale price, and are split between the buyer and seller.

Home Closing Costs

Type of costAverage fee (2020)
Title search$300-600
Title insurance$750-1,000
Home inspection$300–500
Cost of appraising the home$450-650
Survey of the property$350-500
Home buyer credit report$450-650
Loan payoff fees~0.5-1.5 percent of sale price
Settlement or attorney fee$150-650 attorney fee
Applicable taxesVariable
Broker and Realtor CommissionVariable
Mortgage payoff (or prepayment penalty)Variable
Any outstanding amounts owed on the propertyVariable
** Estimates by Opendoor.com

According to Closing Corp data, the average closing costs in the U.S. is $4,876.

Home Closing Documents

  • Request a free copy of your credit report from all three credit reporting companies:
    • Equifax, Experian, Transunion
  • Copies of your paystubs in the last two month.
  • Federal and State tax returns for the last two years.
  • If you’re self-employed, two years of PnL statements.
  • Enough cash to cover a 3.5% down payment and closing costs.
  • Bank statements for your checking, savings, retirement, stock portfolio, etc.

Your credit score will be a big factor when shopping for the best home mortgage rate. When you receive your free credit reports you should go through each one carefully and identify any errors. If you want to dispute an item the creditor will have 30 days to respond.

Once you have all that ready you are more prepared than most.

The 5 Steps For Closing On A Home

The guide below details each of the five steps for closing on a home after you have submitted your mortgage application.

1. Review the Agreements.

Hopefully you have done your research and have some idea of what to expect. Whether your final closing date is a week away, tomorrow or in a few hours from now, you should take some time to review the agreements you’ve signed. If you’ve been diligent in researching the type of home mortgage you want and at an interest rate you’re comfortable with, all that’s left to do is to wait and see if you’ve been approved.

No one can knows every specific detail that goes into the mortgage approval process, but if you and lawyer agree that it’s financially doable on your part you should feel confident about your application.

If you have any doubts or think you may be over-extending, now is the time to bring it up.

2. Come Prepared To The Home Closing Meeting.

You are going to be meeting in a professional setting you should come prepared. That means making sure you know where you’re going, dressing and grooming yourself neatly, getting everything you need to bring along together  and leaving so you’ll arrive early. You definitely want to make a good impression on the people who will be entrusting you with thousands of dollars.

You probably won’t lose a loan by dressing casually or being late, but it won’t help your chances of getting approved either. Even if you’re not a dress-up sort of person you should make an exception. This is likely the biggest financial decision you’ve made.

3. Review All Documents

Closing on a home mortgage loan involves a lot of paperwork. It might end up feeling like the majority of the closing period is spent signing your name and confirming the date. It’s tempting to blindly sign all the documents, but you and your attorney should both be reading each page. A good lawyer should be able to spot important typos, unexpected clauses, etc.

At the signing here are some of the documents you will be asked to sign:

Each one of these can be complex and it’s too much to cover in this article. To learn more about them you can click on the inserted links. You should know what these documents are comprised of and used for prior to signing them.

Do not sign anything that you don’t understand.

4. Handing Over the Necessary Papers

After you have looked over and signed the documents, it’s time to give your lender everything you agreed to. The requirements vary from lender to lender so ask them for a list of what’s needed before the meeting. Make sure that you gather have it all together in advance. You don’t want to be scrambling for a bank certified check the day before the closing.

The lender may ask you to bring any of these to the signing.

  • Proof of Insurance
  • The Results of Requested Inspections
  • A check to cover all closing costs

The term “closing costs” covers a wide range of fees that you’ll have to pay to finish the deal. Typically the buyer and seller agree to split the closing costs which can range from 3-7%.

Sellers usually pay between 1% and 3%.

5. Receiving the Loan

So here it is, the final step in the home closing process. You’ve signed all the necessary documents and paid all the fees owed. Now it’s time for the lender to do their part and transfer ownership of the home to you.

Simply put – this is the part where you are officially a homeowner!

Final Thoughts:

As you can see there are a lot of steps for closing on a home. All of this may seem like a lot, but it’s standard procedure for homebuyers. Most lenders understand that it may be your first time or have done it a few times in your life and will happily guide you through the process. By this point your lender wants to close the deal just as bad as you do.

If you remember anything from reading this, please remember two things.

Have your attorney review all signed paperwork before you submit it.

Too many homebuyers just accept and sign everything with a dotted line. These forms have the power to can lock you into a financial obligation for the next 10-30 years, or more. They are agreements that you must honor, errors and all. Read it carefully and know what you are signing.

Do not be afraid to ask questions during the process.

Your attorney should be able to explain what each document entails and the risks associated with it are.

Finalizing a deal can move quickly or slowly. There are a lot of steps that need to be completed, and in a specific order for closing on a home. Having all the required paperwork ready will make the process easier, and will you a more attractive as a homebuyer.


If you think we missed any steps for closing on a home, please let us know in the comments below or send us an email: [email protected]

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