Step 9: Closing the Loan

Ten Steps to the Successful Completion of the Home Buying Process

The final step in the home buying process before you get the keys to your new home is the closing. Most closings are actually two closings combined into one. At this stage in the process, you will be closing on the purchase of the property and also on the mortgage loan. In order to do so, you will be asked to complete a mountain of paperwork that is common to most closings, although you may be asked to review several unique documents that arise out of your particular transaction.

The actual closing process, which in different parts of the country is also known as the “settlement” or “escrow” process, is the final and most important step in the home buying process. In practice, the closing brings together all the parties that have an interest in the transaction and completes all the paperwork that is necessary to complete the deal.

For example, the buyer and seller will transfer the deed to the property, the buyer will complete the requirements to obtain the mortgage loan, title insurance will ensure that the buyer will assume legal title to the property, all documents will be recorded with the proper government agencies and all other transaction costs will be paid. In most transactions, all these various functions are handled by a closing agent that will facilitate the closing process.

In most cases, the closing process is a brief process where all the necessary paperwork needed to complete the transaction is signed. Closing is typically held in an office setting, sometimes with the buyer and seller at the same table with each party completing their papers separately.

Whatever the case, the result is that title to the property is transferred from seller to buyer. The buyer receives the keys and the seller receives payment for the home. From the amount credited to the seller, the closing agent subtracts money to pay off the existing mortgage and other transaction costs. Deeds, loan papers, and other documents are prepared, signed and filed with local property record offices.

Finally, one of the best parts of closing is that the buyer and seller typically need to do very little to complete the process. Before closing, buyers typically have an opportunity to walk through the property to ensure that its condition has not materially changed since the sales contract was signed.

At the closing itself, all paperwork has been prepared by the closing agents, title companies, mortgage lenders and any attorneys involved in the process. This paperwork reflects the sales contract and allows the parties to the transaction to verify their respective interests.

At the end of the closing, you get the keys to the property and open the curtain on your new life as a homeowner. This is the end of the home buying process.