Closing is the final step in executing a real estate transaction. The property is transferred from the seller to the buyer, and the seller receives the money from the sale. Typically, all contracts are signed and all closing costs are paid on or before the closing date, during the signing appointment.
The signing appointment is exactly what it sounds like — you sit down with a thick stack of documents, review them as needed, and sign your name on the line. When you’re done, those documents are sent to the county government, and you’re recorded as the property’s new owner.
What documents do I need to sign?
It depends on your location, the type of property, the type of loan, and other details. In a nutshell, you’ll typically sign these types of documents:
- Mortgage/Promissory Note: The mortgage note is a legal document that outlines the terms of your loan, and acts as your written promise to repay it. This document will include the amount of your payments, instructions for repaying your loan, and an explanation of penalties you’ll face if you stop paying.
- Mortgage or Deed of Trust: Certain states uses mortgages, while others use deeds of trust. They basically perform the same function – to give the lender a lien, or legal claim, on your home in the event that you stop paying back your mortgage loan.
- HUD-1 Settlement Statement: This document explains the details of your loan, including interest rates, monthly payments, and closing costs. To learn more before you owe, visit http://www.consumerfinance.gov/knowbeforeyouowe/
- Truth-in-Lending Statement: The Truth-in-Lending (TIL) Statement shows the total cost of your loan. It will show how many payments you’ll make over the life of the loan, your loans Annual Percentage Rate, your payment schedule, and details about early loan repayment. By federal law, your lender is required to provide you with a TIL within three days of receiving your loan application.
- Affidavits: You’ll probably sign several affidavits– legal documents in which you swear that certain statements are true. For instance, you may sign an affidavit that you are employed at the time of the home purchase, or that you intend to use the home as your primary residence.
- Deed: This is the document that transfers ownership of the home from the seller to the buyer.
What should I look for during my final walk-through?
You might be tempted to start mentally arranging furniture and picking out new paint colors during your final walk-through. Put those feelings aside for now — this is your last chance to look for problems and work with the seller to address any issues you find. You should plan to spend at least an hour walking through the home, paying careful attention to its condition.
Here’s a list of things to look for when making your final walk-through:
- Do the lights and switches still work?
- Are appliances in working order?
- Do toilets flush?
- Do sinks, showers, and tub sprouts run?
- Do sink and tub drain-stoppers function?
- Are all agreed-upon repair items completed?
- Is the home free of any new signs of leaks, mold, or other damage?
- Does the home still contain all of the furniture, appliances, and other items that are included with the purchase?
- Do all windows and doors open and close smoothly?
- Do the heat and air conditioning work?
- Has the previous owner removed all debris, garbage, and unwanted items?