What to Expect When You Close Your Loan

Posted by Laine Smith on 8/30/13 2:05 PM

Topics: Economy Home Buying

You’ve signed the purchase agreement and been approved for the loan, but you still have no rights to the property until the day you get to legally transfer ownership: closing day.


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Closing day is the last piece of the puzzle, the day in which the formalities of your real estate transaction are concluded. At closing, you will sign the mortgage documents, the sellers will execute the deed to the property, funds will be collected and distributed and the closing agent will walk you through the paperwork giving you legal ownership of the home.

Closing Costs

When you get a mortgage, you and the sellers will need to pay closing costs. Closing costs are fees charged by lenders and third parties in relation to the purchase of your home. The agreement of sale negotiated previously between the buyer and seller states who will pay each cost. Bring a certified or cashier’s check for the costs owed.

Closing costs for the buyer typically cover expenses such as escrow fees, attorney fees, title insurance, appraisal and inspection, survey charge, and recording deed and mortgage.

Sellers’ expenses often include cost of the abstract or title depending on the location of the property, real estate commission, recording mortgage, survey charge, escrow fees and attorney fees.

What You Need to Close

Along with available funds for closing costs, it is also required that you provide proof of various items before you can close on your loan. They typically include: title insurance policy, homeowner’s insurance, termite inspection and certification, flood insurance, etc.

Signing the Documents

For the most part, your role at closing is to review and sign the documents of the mortgage loan. The closing agent will explain the purpose for each document and answer any questions that arise. Below is a brief description of some of the major documents associated with closing and their significance.

  • Settlement Statement – HUD 1 Form – This form provides the details of the sale, including price, amount of financing, loan fees and charges, proration of real estate taxes, amounts paid between you and the seller and funds due to third parties. It must be signed by the seller and buyer and is prepared by the closing agent.
  • Final Truth-in-Lending Act – When you first applied for your mortgage, you received a truth-in-lending statement which included the estimated monthly payment and total cost of finance charges involved in your mortgage. You will receive a final TILA if those amounts have changed.
  • Mortgage Note – This is legal evidence of your mortgage and is a formal promise to repay the debt. It explains the amount and terms of your loans and penalties that can be inflicted by the lender if you fail to pay.
  • Deed of Trust – This document lists the legal obligations and rights of you and the lender. It also states the lender’s right to foreclose on the home if you default on the loan.

These main forms will be followed by a number of documents required by the lender or required by state or Federal law. When all documents are signed and the closing agent is satisfied with the closing package, you become the owner and are given keys to the property.


Looking for more information on buying a home? Our Mortgage 101 Handbook is the ultimate guide for First Time Home Buyers.

Download: Mortgage 101 Handbook



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