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Education Center

Closing, the final step in the home-buying process

Closing

Settlement, or closing, is the final step in the home-buying process. This is the time when the seller is paid, title is transferred, and all elements of the sale agreement are completed. Learn what your closing costs will be. Closing brings together all the players in the transaction - buyers, sellers, brokers, lawyers, lenders, title insurance companies, termite inspectors, tax collectors - so there are several things you'll need to consider:

Settlement papers. Several days before closing, tell the settlement agent (the party conducting the closing) that you want copies of the settlement papers made available to you and your attorney at least a day before settlement. Review these papers to ensure that you are receiving all the credits to which you are entitled, and to be certain that no extra costs are being charged.
Payment. Ask the closing agent how cash due at closing is to be paid (a certified check, cashier's check, etc.).
Escrow account costs. If you buy with less than 20% down, your lender will maintain an escrow account for property tax and insurance payments. If the lender doesn't require escrow, you may elect to make tax and insurance payments yourself - though many people prefer to have the lender do it.
Title insurance re-issue rates. Title insurance, in all states but Iowa, is commonly used to ensure that you are receiving good and marketable title to the property - even if local property records are faulty. You may qualify for a low-cost title insurance re-issue rate if the home has been sold or refinanced within the past five to ten years.
Legal counsel. If you don't already have a real estate attorney or legal clinic, it is suggested that you obtain assistance. It's important to have someone who understands legal language and who can explain what various documents mean and whether the closing papers are consistent with all sales conditions.
Taxes. After closing or at tax time, have your tax professional review closing paperwork. It's possible that certain items may be deductible in the tax year you purchased your home.

Note: Save all your closing papers in a safe place. It will be valuable years from now if you sell.

Once you've completed all of your paperwork and paid all closing costs, you can celebrate the fact that you now have a home to call your own.