Closing Day: What to Expect When You Buy a Home

Most of the work of closing happens before you sit down to sign. In the final week or two, expect to:

• Receive your Closing Disclosure. For most mortgage loans, federal rules require the lender to provide it at least three business days before closing. It lists your final loan terms, monthly payment and every closing cost.
• Compare it with your Loan Estimate. Check the loan amount, interest rate, loan type, monthly payment and cash to close. Some fees can change between the two documents and others cannot; ask your lender to explain any difference.
• Confirm the amount you need to bring, and how and when to send it.
• Finalize homeowners insurance and send proof to your lender.
• Arrange utilities to transfer into your name on the closing date.
• Respond to any last lender requests right away.

Certain changes, such as an increase in the APR beyond allowed tolerances, a change in loan product or the addition of a prepayment penalty, can trigger a new three-business-day waiting period. That is another reason to raise questions early rather than at the closing table.

Keep your finances unchanged until after closing. Lenders often re-verify employment and may check credit again shortly before funding; the guide to getting pre-approved lists the changes that can derail a loan.

The final walkthrough is your last chance to see the home before you own it. It is usually scheduled within a day or two of closing, after the seller has moved out where that was agreed.

It is not a second inspection. Its purpose is to confirm that the home is in the condition you agreed to buy it in. Check that:

• Repairs the seller agreed to make have been completed, and ask for receipts or invoices.
• Appliances, fixtures and other items included in the sale are still there.
• Lights, faucets, toilets, heating and cooling, and major appliances work.
• There is no new damage, such as leaks, broken windows or wall damage from moving furniture.
• The seller's belongings and trash have been removed, unless otherwise agreed.
• You have, or know how you will receive, all keys, garage door openers and access codes.

If you find a problem, tell your agent immediately and before you sign. Options can include a repair before closing, a credit, money held back in escrow until the work is done, or a delay. Which are available depends on your contract and, for a financed purchase, on your lender.

On bank-owned and other as-is purchases, the walkthrough still matters. The seller may not be making repairs, but you should confirm nothing has changed since your inspection, such as damage from a burst pipe or a break-in at a vacant home.

Your closing agent will tell you exactly what is needed, but most buyers should be ready with:

• Government-issued photo ID for everyone signing. Some closings need two forms of ID, and names should match the loan documents.
• Funds to close, usually sent in advance by wire transfer or brought as a cashier's check, in the exact form the closing agent requires. Personal checks are often not accepted for large amounts.
• Your copy of the Closing Disclosure to compare against the final documents.
• Proof of homeowners insurance, if your lender has not already confirmed it.
• Any documents your lender or closing agent requested, such as a power of attorney or trust documents, approved in advance.

Allow plenty of time. A typical buyer signing takes about an hour, and longer if there are questions. If you cannot attend in person, ask early about alternatives such as a mail-away closing, signing with a mobile notary or, where available, remote online notarization. Rules on remote signing vary by state and lender.

If you are buying with a spouse or co-borrower, confirm whether both of you need to sign. In some states a spouse may need to sign certain documents even if they are not on the loan.

A closing can involve a thick stack of documents. The most important are:

• The promissory note, your promise to repay the loan on the stated terms.
• The security instrument, either a mortgage or a deed of trust depending on your state, which gives the lender a claim on the property if you do not repay.
• The Closing Disclosure, confirming final loan terms and costs.
• The settlement statement, which itemizes every credit and charge for buyer and seller.
• The deed, signed by the seller, which transfers ownership to you. The type of deed matters; a general warranty deed carries different promises from a special warranty deed or a quitclaim deed.
• Escrow account disclosure, showing how your taxes and insurance will be collected and paid.
• Affidavits and certifications, such as statements that you will occupy the home if you used an owner-occupant loan.

Read before you sign, and ask the closing agent or your attorney to explain anything you do not understand. It is your right to take the time you need.

Title insurance is also finalized at closing. Your lender almost always requires a lender's policy; an owner's policy protects you and is usually optional. The guide to title, liens and due diligence explains why many buyers choose to purchase one.

Closing funds pass through a neutral third party, usually the title company, escrow agent or closing attorney. That party collects your funds, receives the loan proceeds from your lender, pays off the seller's existing loans and liens, pays closing costs and commissions, and sends the remainder to the seller.

Your share is the "cash to close" on your Closing Disclosure. It is broadly your down payment plus your closing costs, minus your earnest money deposit and any credits from the seller or lender. The guide to closing costs explains each category, and the closing cost calculator can help you check the overall figure.

Timing matters. Wire transfers can take time to arrive and may not be processed outside banking hours, so send funds on the schedule your closing agent gives you. Ask whether your state uses "wet" funding, where funds are disbursed at signing, or "dry" funding, where disbursement happens after documents are reviewed, because that affects when the sale is complete.

Real estate closings are a major target for wire fraud. Criminals send convincing emails that appear to come from an agent, lender or title company with new wiring instructions, so never act on emailed changes to payment details.

Once the documents are signed, the funds have been disbursed and the deed is recorded, the home is yours. When you actually receive the keys depends on your contract and local practice; in some places it is at the closing table, in others after recording.

In the weeks that follow:

• Keep your closing documents in a safe place, including the settlement statement, note, deed and title policy. You will need some of them for taxes and when you sell or refinance.
• Confirm the deed was recorded. The recorded deed is usually mailed to you later; many county recorders also let you look it up online.
• Watch for your first payment. Your Closing Disclosure shows the first payment date. Your loan may be transferred to a different servicer; you should receive written notice if it is. Be wary of unexpected payment requests and verify any servicing change through your original lender.
• Change the locks and update access codes.
• Check property tax exemptions. Many states offer a homestead or similar exemption for owner-occupied homes, but you may need to apply.
• Keep records of improvements, which can matter for taxes when you sell.

Expect mail from companies offering to sell you a copy of your deed or mortgage protection products. Many are legitimate businesses, but you rarely need to pay a third party for a copy of your own deed.