After you’ve been approved for a mortgage, found your new home and had your offer accepted, the closing process begins.
The following information will help you prepare for this final stage, so that you can have peace of mind and avoid any roadblocks on your journey to home ownership.
THE CLOSING TIMELINE
The closing timeline begins almost as soon as an owner accepts an offer and includes these steps:
- Order Opening (3 to 5 Days): After a real estate agent or lender requests a closing, the title agency informs all parties that they will be handling the closing. During this phase, employees conduct a title search and send a title commitment and closing protection letter to the lender.
- Closing Prep (2 to 3 Weeks): Closing prep involves gathering accounting information, balancing the escrow account, clearing up title issues, and preparing closing documents.
- Closing (1 Day): The buyer and seller sign closing documents on the closing date.
THE CLOSING DAY
On Closing Day, the official day you sign your final paperwork, everything should be in order to finalize your transaction. Title & escrow companies prepare and generate closing documents, including the Closing Disclosure, which provides information about the new mortgage and the costs involved, such as:
- Loan term, loan amount and interest rate
- Estimated amount of money you’ll pay on your loan each month
- Closing costs, which include origination, underwriting and government fees
- Amount of money you’ll need to bring to closing, also known as cash to close
- Loan disclosures
As a result of the financial crisis in 2008, closing disclosures are now provided three days before closing. This three day period allows you to have adequate time to review the documents or ask for clarification.
Other documents typically needed for a closing include:
- HUD-1: lists all of the charges paid by buyers and sellers in a real estate transaction – usually used for reverse mortgages and refinancing
- ALTA Settlement Statement: itemized list detailing costs buyers and sellers pay
- 1099-S: Internal Revenue Service form filed when a property is sold or exchanged
- Deed: the legal document that transfers ownership from the seller to the buyer
- Deed of Trust: secured real estate transaction used in place of a mortgage in some states
Throughout the closing process, the title company will procure and store these documents for the client.
When it’s time to sign, all of the documents should be ready and provided to you by the title agency. However, there are some items that you should bring to the closing table, such as:
- A form of identification, like a driver’s license, passport or government-issued photo ID
- A cashier’s or certified check in the amount of closing costs due (cash and personal checks are not usually accepted)
- Your Closing Disclosure to compare to final paperwork
- Proof of your homeowners insurance
AFTER THE CLOSING
Post-closing is a busy time for the title company, which must issue the title insurance, disburse money from the escrow account, and fund the loan. Documents are also delivered to and recorded at the local county recording office. If the homeowner is refinancing a mortgage, they have three days to back out of the new mortgage.
STREAMLINING THE PROCESS
Real estate closings are complex transactions that require careful oversight and preparation. Even a minor error can derail the process, causing headaches for every stakeholder in the transaction.
At Black Tie Title, we work diligently to streamline the closing process and to create transparency and better experiences for every party involved, and especially the end consumer (the home buyer).
Need more help? If you would like to learn more about the closing process, give one of our title and escrow experts a call at 216-333-1295. We would love to assist you in this most exciting process of owning your own home.
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