The closing or ‘settlement’ process itself generally takes place at one table (either at the office of an attorney or title company), where buyers sign all documents related to their loan and the transaction itself. After all, documents are signed and payments exchanged, buyers generally take possession of the keys unless a separate agreement has been reached to allow the seller to stay in the property for a period after closing. The detailed steps that makeup closing are:
1. As part of the preparation for closing, the attorney or title company performs a title search (if they haven’t already) to determine if there are any liens or assessments on the title. Provided the title is deemed ‘clear,’ the closing proceeds as planned and the attorney or title company issues a title commitment. All paperwork for changing the title/deed and title insurance is prepared, and a final closing date is confirmed with all parties.
2. A final cash figure for what a buyer needs to bring to the closing in the form of a cashier’s check is calculated. This is based not only on a mortgage’s closing costs but factors like property taxes and utilities paid into date by the seller.
3. A final walkthrough (also referred to as a final inspection) will often be performed the day of or before closing to verify the property is in the same condition it was when the process began.
4. At the closing or settlement, table, the buyer (and seller) sign all closing documents, including the HUD-1 (see a sample HUD-1 here), and the final loan documents.
5. The buyer pays the remaining funds in their downpayment to an attorney or a representative of the title company (who is present at closing and sometimes called a ‘settlement agent’) via cashier’s check.
6. The representative from the title company or attorney will then record the transaction and deed with the appropriate municipality.
7. The buyer receives the keys and, unless indicated differently in the contract, officially takes possession of the property.