The final exchange process

What is a closing?

A meeting at which a sale of a property is finalized by the buyer signing the mortgage documents and paying closing costs. Also called "settlement."

What happens at a closing?

Ownership of the property is transferred from the seller to the buyer.

Where does the closing take place?

Traditionally, closings take place at the offices of the title company handling the transaction. The title company will provide title insurance securing the transfer of title to the property. Alternatively, closings occasionally take place at a lawyer's office.

Who is present at the closing?

The Buyer, the Seller, the Buyer and Seller Agents, the Title Officer, and sometimes the Loan Officer.

What is a closing cost item?

A fee or amount that a home buyer must pay at closing for a single service, tax, or product. Closing costs are made up of individual closing cost items such as origination fees and attorney's fees. Many closing cost items are included as numbered items on the HUD-1 statement.

What are closing costs?

Expenses (over and above the price of the property) incurred by buyers and sellers in transferring ownership of a property. Closing costs normally include an origination fee, an attorney's fee, taxes, an amount placed in escrow, and charges for obtaining title insurance and a survey. Closing costs percentage will vary according to the area of the country; lenders or Realtors® often provide estimates of closing costs to prospective homebuyers.

What is a closing statement?

Also known as a HUD-1 statement, a closing statement is a document that provides an itemized listing of the funds that are payable at closing. Items that appear on the statement include real estate commissions, loan fees, points, and initial escrow amounts. Each item on the statement is represented by a separate number within a standardized numbering system. The totals at the bottom of the HUD-1 statement define the seller's net proceeds and the buyer's net payment at closing. The blank form for the statement is published by the Department of Housing and Urban Development (HUD). The HUD-1 statement is also known as the "closing statement" or "settlement sheet."

How long does a closing last?

On average, if the loan package was received by the title company the day before closing, a closing lasts 2 hours. When the loan package is delayed the closing can often take longer.

What you should bring with you

  • Driver licence
  • All funds must be in the form of a cashier's check or money porder, or can be wired to the title company in advance (down payment, closing costs)
  • Buyer: Any information or documentation required by the mortgage company, also known as special provisions
  • Buyer: a termite inspection report may be required
  • Seller: keys, garage door openers
  • Seller: invoices for paid repairs (the buyer may elect to walk through property prior to closing)
  • Seller: all appliance warrantees