By: Sapphire Title & Escrow Company  |  Published July 10, 2023

Closing on a home is an exciting and significant milestone in anyone’s life, especially for first time homebuyers. The process can also be a complex and unfamiliar one for many. As a trusted title and escrow company, we understand the importance of ensuring a smooth closing experience for our clients. In this blog, we’ll walk you through the essential things every consumer should know about closing on a home so that you can get to the table faster and confidently, avoiding any potential roadblocks.

What Is a Closing?
A real estate closing is the final step in the real estate buying and selling process. Once an offer on a property is officially accepted by the seller, a purchase agreement is made, and a closing date is set. At the closing, the participants review, authorize, and date numerous legal documents. Upon closing, the property ownership is formally transferred from the seller to the buyer, after which the buyer becomes the new homeowner.

What to Know Before Closing Day
Before you make it to closing and are handed the keys to your new home, there are several crucial steps that need to be completed – some by you, and others by various involved parties such as your real estate agent, lender, title company, escrow agent, and/or your attorney. It’s important that you familiarize yourself with several key elements related to the purchase of your home/closing day.

Scheduling the Closing / Closing Timeline: Once all the conditions and contingencies of the real estate contract are satisfied, the closing date will be scheduled. Factors like loan processing, appraisal, and inspections can impact the closing date. Typically, the buyer’s lender or the real estate agent will coordinate with the title company and other involved parties to set a mutually convenient time and location for the closing.

Home Inspection and Appraisal: Before closing, your lender may require a home inspection and appraisal. These evaluations help assess the condition of the property and determine its fair market value.

Reviewing Documents: You will be provided with various documents to review and sign, such as the purchase agreement, loan documents, and the closing disclosure prior to closing day. Take the time to carefully read and understand these documents to ensure there are no surprises during the closing. Paperwork is critical to closing a property deal. Despite there being a stack of papers filled with complex legal terms and jargon, you should read all of it yourself. If you don’t understand something, consult a real estate attorney. Your agent will also be helpful in making sense of any complex legal language.

Title Search and Title Insurance: As a title company, we play a vital role in ensuring the property’s title is clear and marketable. Before the closing, a comprehensive title search will be performed to identify any potential liens, encumbrances, or ownership issues that could affect the property. This step ensures that the buyer receives a valid and insurable title and protection against potential issues that may arise with the property’s title in the future.

Closing Costs: Closing costs typically include fees for the loan origination, appraisal, title search, title insurance, attorney fees, and other related services. It’s essential to review the Loan Estimate and Closing Disclosure (CD) or HUD-1 Settlement Statement, which provides a detailed breakdown of the financial aspects of the transaction. Read more about closing costs.

Down Payment: Ensure that you have the necessary funds for the down payment, which is typically a percentage of the home’s purchase price. Your lender will provide specific details regarding the down payment requirements.

Closing Funds: Plan ahead to have the funds required for closing readily available. This could include a cashier’s check or wire transfer to cover your closing costs and the down payment.

Clearing Contingencies: Ensure that any contingencies outlined in your purchase agreement, such as repairs or loan approval, are satisfactorily met before the closing date.

Closing Day
On closing day, be sure to take all of your real estate closing documents, a government-issued photo identification, your form of payment to cover the real estate closing costs, and anything else you were instructed to take. Expect the possibility of several people being involved, such as your real estate closing attorney, the seller, real estate agents of both parties, and representatives of the title company and lender. On occasion, the buyer(s) and the seller(s) choose to schedule separate closing times.

Be prepared to sign many legal documents before the property can finally be declared as yours. Although you may feel pressured by the people who are waiting for you to sign your papers, such as the notary or the mortgage lender, read each page carefully as the fine print can have a major impact for years to come. Make sure all numbers, particularly your interest rate, and all other agreed terms are clearly mentioned and accurate. You don’t want to be blindsided by your first mortgage payment and find that you are locked in. Take time to review each document and voice any questions or concerns.

Once all the documents are signed, the closing agent will submit all lender documents to the lender and receive a funding number to disburse funds according to the agreed-upon terms. This includes paying off existing mortgages or liens, distributing funds to the seller, and covering closing costs, taxes, and fees.

After Closing
After the closing is complete and funding has been approved by the lender, the buyer will receive the keys to their new property. Finally, the title company will record the necessary documents with the appropriate county clerk’s office. This step ensures the legal transfer of ownership and creates a public record of the transaction.

Closing on a home is a significant, exciting step in your homeownership journey. At Sapphire Title & Escrow Company, we are dedicated to providing you with expert guidance and ensuring a smooth, enjoyable closing experience. If you have any questions or need assistance, our experienced team is here to help. Congratulations on your upcoming home closing, and welcome to your new home!