Would you like to close at home? Be prepared to review and sign a stack of important legal documents. These closing documents complete your real estate transaction. Even if you’re a veteran homebuyer, it’s overwhelming. And if you’re renting a house, living in an apartment and buying a house for the first time, this process may seem completely unfamiliar…
This Redfin article explains each of the key closing documents and their importance to your purchase, allowing you to grab the key and go home immediately.
In this article:
What is a closing document?
A closing document is a set of legal forms that you and the seller sign during the closure process. These documents provide an overview of the buyer’s final costs and confirm the seller’s sales.
While closing days may feel like a pile of documents, each form plays a key role in confirming your loan terms and what you actually pay at the end. The exact form to sign may vary depending on your state property law. Your real estate agent or attorney can let you know if your state needs additional items.
Understanding these documents in advance will make closing dates feel more manageable and help you to confidently complete your home purchase.
Close disclosure
Closing disclosures show all financial details and total closure costs for your mortgage. Lenders need to provide this at least 3 business days before closing, so they have time to review.
Careful reviews are essential to understanding the terms of your loan, the expected monthly payments, and closing fees. Ask your real estate agent for help with any questions you may encounter during your review.
Homeowner Insurance Proof
It’s up to you to decide which homeowner insurance you need, but lenders will need proof of the day they close. This will protect their investments and your new home from events such as fire, vandalism, and natural disasters. As soon as you know your deadline, consult your insurance company to make sure you start the day.
To prove coverage to your lender, ask your insurance company for a declaration page or the full policy. If the policy is new, we may provide a temporary insurance binder until the final document is ready.
Loan application
Although this document may have been completed previously, the loan application is included in the closing document for final review and signature. Check carefully to make sure everything is still accurate. If your financial situation changes in any way, let your lender know immediately, like your job or income.
Promising note
This written agreement between the borrower and lender is a legal document indicating that you will be repaid on your mortgage. We’ll go into detail about the total loan amount, interest rates, payment schedules, and what happens when defaults. By signing, we promise to repay the loan in accordance with these terms.
Mortgage or trust deed
Whether you use a deed of trust in your mortgage or closing document will depend on the state of the state you live in. Both documents serve as security in the case of payment defaults. When you sign a mortgage or trust deed, it legally protects your home as collateral for the loan. Simply put, if you miss a payment, it gives the lender the right to seize or sell the home.
Affidavit of title
This statement of oath from the seller confirms that they own property, are entitled to sell it, and there are no legal claims such as property liens against it. It will help protect you and your lender from future title issues.
Title Insurance
Title Insurance protects you and your lender against title-related issues such as liens, unpaid taxes, and ownership disputes. All of these issues can result in economic losses, so it is essential to carefully review these closing documents. A real estate lawyer or title company will help you ensure that everything is accurate.
First Escrow Statement
Some expenses, such as property taxes, homeowner insurance and tax deposits, are paid through an escrow account. The first escrow statement details what lenders expect to pay from it and how much they will contribute each month to cover these costs in the first year.
I will transfer the tax declaration
Some states require you to sign a transfer tax declaration to document taxes from home sales. Each state has its own rules, so it’s important to understand how it affects local laws and closure costs.
Occupation Certificate
If you are buying a brand new home, the certificate of occupancy states that the property is safe and has local building codes. It usually comes from builders, but is also available from local zoning authorities. Normally not required for your own home, but you can request it to ensure that the renovation is properly permitted.
Certificate
This deed is a legally signed document that transfers ownership from the seller to you. Unlike a title that shows who owns the property, the deed will formally record the transfer and be submitted to the local government.
Documentation FAQ
How do I get a copy of a closing document?
You will need to receive a copy of all documents you signed at the deadline, but you can always contact the real estate agent, title company, or county recorder’s office to get more.
Are the closing documents the same for both buyers and sellers?
No, the buyer has a different closing document than the seller. Sellers primarily sign and receive documents transferring rights and ownership of property, while buyers sign and receive most financial documents, such as mortgages and insurance. Several documents, such as the act, are duplicated and are signed by the parties.
Do I need a real estate agent or lawyer to review the closing documents?
Although not necessarily, we recommend that you specialize in your closing documentation to ensure accuracy and understanding. State requirements or complex transactions are particularly valid reasons to assist professional third parties.
How long does it take for me to sign the closing document and close inside my house?
The closing process can take 30-60 days from the time the offer is accepted, but it takes less than a day to sign the document. Please check everything carefully on the days leading up to closing date to avoid errors and obstacles.
Can I sign a closing document remotely?
Yes, you can sign the ending document online. Some states have specific requirements for remote closing, so check with your real estate agent or attorney for more information on how to navigate the process online.
A collection of closed documents
Understanding these major closed documents will help you feel ready to pinpoint a pile of documents on the closing day. Take your time to check everything carefully before signing. Once you reach the top, grab the key and celebrate the closure with your new home.
