Closing On A House: Your Step-By-Step Guide

It's been a long journey to reach closing day. You've worked hard to get here and are probably excited to wrap up the process and officially make the house your home.

Our guide will walk you through what to expect on closing day and how to prepare in advance. With the right steps, you can move through the process smoothly and avoid any last-minute surprises on your way to homeownership.

11 Steps to Close On Your House With a Mortgage

Closing, also known as settlement, finalizes the sales contract by resolving all obligations between the buyer, seller and any other involved parties. In simple terms, it’s the final step in legally transferring homeownership.

Closing on a house is one of the most fulfilling moments in the home buying process. Ideally, you’ll arrive on closing day with all your questions answered, negotiations finalized and your mortgage preapproved. This is the day you’re ready to officially become the legal owner of your new home.

We’ll guide you through each step of the house closing process.

1. Understand Your Documents

Start by creating a checklist of all the documents you need for your closing, along with their submission deadlines. Mark them off as you send them to your lender, and record the date you submitted them. Also, confirm that the lender received each document.

Here’s a list of common closing documents to help you get started:

• Closing Disclosure: Details all the key information about your loan.
• Seller’s Disclosure: A Seller’s Disclosure lists any known defects of the property, which the seller is legally required to disclose and may affect your purchase decision.
• Title documents: A title company conducts a title search to verify the seller’s ownership and check for liens. A real estate attorney or escrow company reviews these documents to ensure there are no issues with transferring ownership to you.
• Loan application: Your lender provides a copy of your original loan application for closing.

Organizing your closing documents ensures you and your lender are fully prepared. It also makes it easier to locate and send any last-minute forms quickly, which can help prevent delays and keep the process on track.

2. Go Over Your Loan Application

Review your loan application carefully to confirm its accuracy and notify your lender of any updates since you first applied. Changes like a new job or additional debts need to be reported, as they can impact the terms of your home loan.

3. Review The Seller’s Disclosure

Seller’s disclosures can uncover potential problems that might save you thousands of dollars — or even prevent buyer’s remorse. Depending on your state’s requirements, these disclosures might include details about:

• Repair history
• Water damage
• Foundation issues
• Infestations
• Lead paint
• Malfunctioning systems

Read the disclosures carefully, as they might reveal significant issues you didn’t notice during your final walk-through. Remember, buying a house typically comes with a “no-return policy.”

If you spot any red flags, don’t hesitate to dig deeper. Ask the seller for more details or hire a home inspector to assess specific concerns. Once you’ve gathered enough information, decide if you still want to move forward with closing on the house. If so, consider negotiating with the seller to either cover the cost of repairs or reduce the purchase price to account for them.

Not all states require seller disclosures. Talk to your real estate agent to learn what is mandatory in your area.

4. Review The Closing Disclosure

Your lender is required by law to send you the Closing Disclosure at least three business days before your closing day. This document outlines key details about your loan, including:

• Loan term, amount, and interest rate
• Estimated monthly mortgage payment
• Closing costs, which include origination, underwriting, and government fees
• Cash to close — the amount of money you’ll need to bring to closing
• Loan disclosures

One of the most important steps in closing on a house is thoroughly reviewing this document. Compare it to the loan estimate to ensure everything matches up and there are no discrepancies.

If you spot an error, contact your lender to have it corrected. While it might delay your closing, your lender must fix any mistakes before you sign the final documents.

5. Coordinate Inspections And Repairs

Before finalizing the sale, it’s crucial to coordinate any necessary inspections and address repairs that might come up. Inspections help identify potential issues with the property, and repairs can prevent unexpected costs down the road. Schedule these inspections early and work with your real estate agent to coordinate any follow-up actions.

Here are three important types of inspections to consider:

• Home inspection: A general inspection of the property to check for issues like structural problems, plumbing and electrical systems, and potential safety hazards.
• Pest inspection: It identifies any infestations or damage caused by pests, such as termites or rodents, that could compromise the home’s integrity.
• Radon inspection: Tests the home for radon gas, a potentially harmful substance that can accumulate in basements and other enclosed spaces.

Once inspections are complete, review the results with your agent and decide if repairs are needed. If the inspection reveals significant issues, you can negotiate with the seller for repairs or request a credit toward repairs after closing.

6. Select A Homeowners Insurance Plan

Most lenders will require you to have a homeowners insurance policy in place for your new home, and you’ll need to provide proof of coverage before or during closing. Shop around for different plans and coverage options to find one that meets your needs and fits your budget.

The cost of your insurance plan will vary based on:

• The features and condition of your home
• The level of coverage you choose
• The homeowners insurance deductible you're comfortable with for your policy

7. Prepare Your Finances For Closing Day

Your Closing Disclosure will outline the exact amount you need to bring to closing. Here's a quick overview of various expenses that may be your responsibility, the lender’s, or the seller’s:

• Closing costs: You pay these fees to the lender and third parties, typically 3% – 6% of the home’s purchase price. These can include appraisal, origination, title insurance, and application fees.
• Earnest money: This deposit shows your commitment to purchasing the home. The money is held in escrow and applied toward your down payment or closing costs once the sale is complete.
• Lender credits: Credits from your lender to help cover closing costs, usually in exchange for a higher interest rate, which can increase your long-term expenses.
• Cash to close: The total amount needed at closing, including your down payment and closing costs. Government-backed loans may have lower down payment requirements.
• Dry closing: A type of closing where funds are disbursed after the event, so no immediate cash is required from the buyer at the closing.
• Seller concessions: Agreements made by the seller to cover part or all of the closing costs, which can help lower your out-of-pocket expenses.

8. Lock In Your Mortgage Interest Rate

Before finalizing your loan, it’s important to work with your lender to lock in your mortgage interest rate. Mortgage rates can fluctuate until they're officially locked, and securing a rate ensures you’re protected from potential increases.

Your lender will typically offer a lock period, which can range from 30 to 60 days, depending on your loan type and market conditions. During this period, your rate will remain the same, even if the market changes.

Discuss with your lender the best time to lock in your rate based on current trends and your closing timeline. If the rate drops after you lock, some lenders may allow you to adjust it, but it’s important to understand the terms of the lock before making your decision.

9. Transfer Funds for Closing

Before closing day, you’ll need to prepare the funds required for closing costs and down payment. This typically involves either a certified or cashier’s check or a wire transfer to cover the exact amount due.

When arranging the transfer, double-check all the details, including the recipient's information and the total amount needed. This is crucial to avoid any errors or potential fraud.

Scammers may target home buyers, so always confirm the transfer details directly with your title company or lender to ensure everything is accurate and secure. It’s best to make these arrangements well ahead of time to avoid any last-minute issues on closing day. 

10. Plan What To Bring To The Table

On closing day, you’ll be asked to review and sign various documents, most of which will be provided to you at the time. However, there are several important items you’ll need to bring with you. To ensure you don’t forget anything amid the excitement, create a checklist and tick off each item as you pack. 

Here’s a list of the essential items you’ll need to bring:

• A form of identification, such as a driver’s license, passport, or government-issued photo ID
• A certified or cashier’s check for the closing costs due, or proof of a wire transfer (note that cash and personal checks are usually not acceptable)
• Your Closing Disclosure to compare with the final paperwork
• Proof of homeowner’s insurance

It’s a good idea to bring a list of key contacts in case any issues arise. This could include your real estate agent, attorney, or anyone else involved in the process who isn’t attending the closing.

11. Complete Final Walk-Throughs

Before you officially close on your home, it’s essential to conduct a final walk-through. This is your last chance to ensure that the property’s condition matches what was agreed upon in the contract and that any required repairs have been completed.

During the walk-through, check for any issues you may have overlooked in previous visits, such as damage or missing items. If the seller agreed to make repairs, confirm that these have been completed and that the work meets your expectations. 

If something doesn’t look right or there are issues that weren’t addressed, bring them up with your real estate agent immediately. You may need to negotiate with the seller before moving forward with closing. This final step is crucial in making sure everything is in order before you take ownership.

How To Avoid Common Roadblocks To Closing

While there are some roadblocks that may be beyond your control, there are several delays you can avoid with a bit of preparation.

Complete Lender Requests As Soon as Possible

One of the most common delays is financial issues, which are often in the buyer’s hands. Delays can happen when financial documents like bank statements, tax returns, or paycheck stubs are submitted late.

Once your lender starts preparing for closing, reach out to your loan officer to see if they need anything else from you. That way, you’re ahead of the game and won’t have to wait for them to ask. If they request additional documents or clarification, respond as quickly as possible to avoid delays.

Avoid Life Changes That Affect Your Finances

Changes in your finances can also cause delays. Starting a new job, taking on more debt, or missing a payment can impact the terms of your loan or even your eligibility for a mortgage.

While you’re in the process of getting mortgage preapproval, try to keep your finances steady. Avoid big purchases, opening new credit accounts, or missing payments. Keeping your financial picture stable helps avoid unexpected bumps along the way.

Watch Out For Mortgage Scams

Look out for potential scams, especially around closing time. Mortgage wire fraud is a common scheme where scammers impersonate your real estate agent or lender through fake emails, phone numbers, or websites. They may even use your personal information to make the message look legitimate, tricking you into transferring funds to the wrong account. 

To protect yourself, carefully review all documents, and be cautious of any last-minute changes or urgent requests to "act fast." Never share your financial details or social security number via email. Always verify the contact details provided by your agent or lender to ensure everything is above board.

How Long Does It Take To Close On A House?

On average, closing on a home takes about 30 to 45 days, starting from when you submit your mortgage application to when you sign the final paperwork. The actual closing day itself typically lasts around 1 to 2 hours, assuming everything goes smoothly.

The timeline for closing on a house can vary depending on factors such as your level of preparation, the efficiency of your loan officer, and the responsiveness of the seller. To better understand the process, check out the following steps to see what needs to be done by you and your lender before closing day.

The Bottom Line On Closing

Buying a home doesn’t have to feel overwhelming. By taking the time to understand the process from start to finish, you can make things much smoother. 

Knowing exactly what documents to send to your lender and how to prepare for closing day will help avoid delays and make the experience more enjoyable.

Ready to take the first step toward homeownership? Start your mortgage application today, or give us a call at (877) 258-8150.