What Happens at Closing: A First-Time Homebuyer's Complete Guide

You found a house, made an offer, survived the inspection and appraisal, and got your loan approved. Now there's one step left: closing.

Closing (also called "settlement") is when you sign the paperwork, pay the costs, and officially become a homeowner. The process typically takes 1–2 hours, but understanding what happens — and what you're signing — makes the difference between confidence and confusion.

Here's everything you need to know.

What Is Closing?

Closing is the final step in a real estate transaction. It's the meeting (in-person or remote) where:

1. You sign the mortgage documents
2. You pay your closing costs and down payment
3. The seller signs the deed transferring ownership to you
4. The title company or attorney records the transaction with the county
5. You receive the keys

In some states, the buyer and seller sit at the same table. In others, they sign separately. Some states require an attorney to be present; others use a title company or escrow agent.

The Timeline Before Closing Day

Closing doesn't start when you sit down at the table. Several important things happen in the days and weeks beforehand.

3–4 Weeks Before: Loan Processing and Underwriting

Your lender verifies everything — income, employment, assets, credit, the appraisal. They may request additional documents. Respond to every request immediately. Delays here push back your closing date.

1 Week Before: Closing Disclosure

By law (under the TRID rule), your lender must provide your Closing Disclosure (CD) at least 3 business days before closing. This is a 5-page document that details every cost of your loan.

Review it carefully. Compare it to the Loan Estimate you received when you applied. Look for:

• Loan amount and interest rate — do they match your lock?
• Monthly payment breakdown (principal, interest, taxes, insurance, PMI)
• Closing costs — are they within the tolerances allowed by law?
• Cash to close — the exact amount you need to bring

If anything looks wrong, contact your lender immediately. Certain changes to the CD require a new 3-day waiting period, which can delay closing.

2–3 Days Before: Wire Transfer Instructions

Your closing agent will send you wiring instructions for your cash to close. Be extremely careful here. Wire fraud is one of the most common real estate scams.

Critical safety rules:

• Verify wiring instructions by calling the title company directly at a number you already have — not a number from an email
• Never change wiring instructions based on an email or text message
• If instructions seem different from what you expected, stop and verify
• Wire fraud losses are nearly impossible to recover

1 Day Before: Final Walk-Through

You have the right to do a final walk-through of the property, typically 24 hours before closing. This isn't a second inspection — it's a check to confirm:

• The seller has moved out
• Agreed-upon repairs were completed
• No new damage has occurred
• All fixtures and appliances included in the contract are still there
• The home is in substantially the same condition as when you made the offer

If you find problems during the walk-through, tell your agent immediately. You can delay closing until issues are resolved, negotiate a credit, or hold funds in escrow for repairs.

What Happens at the Closing Table

Who's There

Depending on your state and transaction:

• You (the buyer)
• Closing agent — a representative from the title company, escrow company, or attorney's office who conducts the closing
• Your real estate agent (optional but recommended)
• Seller (in some states, or they may sign separately)
• Seller's agent (in some states)
• Lender representative (sometimes present, often not)
• Attorney (required in some states, optional in others)

The Documents You'll Sign

Expect to sign a lot of paperwork. Here are the most important documents:

Closing Disclosure (Final)

You already reviewed the draft. The final version at the table should match. If there are last-minute changes, the closing agent will explain them.

Promissory Note

This is your promise to repay the loan. It specifies:

• Loan amount
• Interest rate
• Monthly payment amount
• Payment due date
• Late payment penalties
• What constitutes default

This is the document that creates your personal liability for the debt. Read it.

Deed of Trust / Mortgage

This document gives the lender a security interest in the property. If you stop making payments, this is what gives them the right to foreclose. It also outlines your obligations as a borrower (maintain the property, keep it insured, pay taxes, etc.).

Deed

The deed transfers ownership from the seller to you. It contains the legal description of the property and will be recorded with the county recorder's office.

Title Insurance Policy

You'll receive (or later receive) a title insurance policy that protects you against defects in the title — things like undisclosed liens, forged documents in the property's history, or ownership disputes.

Escrow/Impound Account Disclosure

If your lender collects taxes and insurance through an [escrow account](/blog/mortgage-escrow-explained) (most do), this document explains how much is being collected monthly and the initial deposit required at closing.

Other Documents

• HUD/Settlement statement or ALTA settlement statement (itemized breakdown of all charges)
• First payment letter (when and where to make your first mortgage payment)
• Compliance agreement (you'll correct any errors in the documents)
• Various affidavits and disclosures specific to your state

The whole stack is typically 100+ pages. The closing agent will walk you through each document. Ask questions about anything you don't understand. This is not the time to be polite and just sign.

Closing Costs: What You'll Pay

Closing costs typically run 2%–5% of the purchase price. On a $300,000 home, that's $6,000–$15,000.

Common Closing Costs for Buyers

Lender Fees:

• Loan origination fee: 0.5%–1.0% of loan amount ($1,500–$3,000 on a $300K loan)
• Appraisal fee: $400–$700
• Credit report fee: $30–$50
• Underwriting fee: $300–$600
• [Discount points](/blog/mortgage-points-explained) (if you're buying down the rate): 1% per point

Third-Party Fees:

• [Title search](/blog/title-search-explained): $200–$400
• Title insurance (lender's policy): $500–$1,500
• Owner's title insurance: $500–$2,000
• Survey: $300–$600
• Attorney fees (if applicable): $500–$1,500

Prepaid Items:

• Homeowner's insurance (first year, often paid upfront): $1,000–$3,000
• Prepaid interest (from closing date to end of month): varies
• Property taxes (prorated): varies
• Initial escrow deposit (2–3 months of taxes and insurance): varies

Government Fees:

• Recording fees: $100–$300
• Transfer taxes (varies by state): can be significant in some areas

How to [Reduce Closing Costs](/blog/mortgage-closing-costs-breakdown)

• Negotiate [seller concessions](/blog/seller-concessions-guide). The seller can contribute toward your closing costs (up to 3%–6% depending on loan type and down payment).
• Shop for third-party services. You have the right to choose your own title company, surveyor, and insurance provider.
• Ask about lender credits. Some lenders offer credits toward closing costs in exchange for a slightly higher interest rate.
• Close at the end of the month. This reduces prepaid interest charges.
• Compare Loan Estimates from multiple lenders. Lender fees vary significantly.

What to Bring to Closing

• Government-issued photo ID (driver's license or passport)
• Cashier's check or proof of wire transfer for cash to close (personal checks are usually not accepted for large amounts)
• Proof of homeowner's insurance
• Copy of the purchase contract
• Any outstanding documents your lender requested

Your closing agent or lender will tell you the exact amount for the cashier's check. Get it from your bank 1–2 days before closing.

After Closing

You Get the Keys

In most states, you get the keys at the closing table or shortly after. In some states with "dry closings," you may need to wait 1–3 days for funding to complete.

Recording the Deed

The title company or attorney files the deed with the county recorder's office, usually within 24–48 hours of closing. This makes your ownership a matter of public record.

Your First Mortgage Payment

Your first payment is typically due on the 1st of the month, at least 30 days after closing. If you close on March 15, your first payment is usually May 1 (because you prepaid interest for the remainder of March at closing, and April's interest is covered by the May payment).

Keep Your Documents

Store your closing documents somewhere safe. You'll need them for:

• Tax deductions (mortgage interest and property tax deductions)
• Proof of ownership
• Future refinancing
• Selling the home

Common Closing Problems and How to Handle Them

Numbers Don't Match the Closing Disclosure

If you spot discrepancies at the table, point them out immediately. Minor clerical errors can be corrected on the spot. If there's a material change (different loan amount, rate, or significantly higher costs), you have the right to delay closing.

Title Issues

Sometimes the title search reveals a lien, unpaid taxes, or other cloud on the title. These must be resolved before closing. Your title company and attorney will work to clear them, but it can cause delays.

Funding Delays

If your lender hasn't completed final funding approval, closing may be postponed. Stay in close contact with your loan officer in the days before closing.

Walk-Through Problems

If the walk-through reveals issues (seller didn't move out, damage occurred, repairs weren't made), work with your agent to negotiate a solution before sitting down at the closing table.

Last-Minute Credit Changes

Don't make any major financial moves between loan approval and closing. Don't open new credit accounts, make large purchases, change jobs, or move money between accounts without telling your lender. Any of these can trigger a new credit pull or underwriting review that delays or derails closing.

Frequently Asked Questions

How long does closing take?

The actual closing appointment typically takes 1–2 hours. The process from accepted offer to closing day is usually 30–45 days.

Can I close on a house remotely?

Many states now allow remote online notarization (RON), which lets you sign closing documents electronically via video call. Ask your closing agent if this is available in your state.

Who pays closing costs — the buyer or the seller?

Both pay closing costs, but different ones. Buyers typically pay lender fees, title insurance, prepaid items, and escrow deposits. Sellers typically pay real estate agent commissions and transfer taxes. Some costs are negotiable.

What if I need to delay closing?

Delays happen. Common reasons include appraisal issues, title problems, or incomplete loan processing. Your purchase contract specifies consequences for delays. Usually, both parties agree to an extension, but a significant delay could jeopardize the deal.

Can I back out at closing?

Technically, yes. But backing out without a valid contractual reason (like an unresolved contingency) means you'll likely lose your [earnest money](/blog/earnest-money-explained) deposit and could face legal consequences. If you have serious concerns, consult with your attorney before closing.

Do I need an attorney at closing?

It depends on your state. Some states (New York, Massachusetts, Connecticut, and others) require an attorney to be involved in real estate transactions. Even in states that don't require one, having an attorney review documents can be worthwhile, especially for first-time buyers.

What's the difference between closing and settlement?

They're the same thing. "Closing" is more common in most of the U.S., while "settlement" is used more in the mid-Atlantic states.

Bottom Line

Closing is the finish line of the homebuying process. It can feel overwhelming because of the volume of paperwork, but if you've reviewed your Closing Disclosure in advance, done your final walk-through, and prepared your funds, the actual closing is straightforward.

Ask questions. Read before you sign. Verify your wire instructions. And after the last signature, congratulations — you're a homeowner.

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