A home closing is the event that marks your move from prospective home buyer to official home owner. When closing day rolls around, you won’t have to do much more than sign a few papers and possibly sign over some money. But it is important to know what you’re signing and understand the legal matters involved in the closing process. This guide gives you an overview of what happens at closing so you know what to expect when this big day rolls around.

Before closing day
There are a number of conditions that have to be met by both the buyer and seller before a sale can move forward. These conditions are called contingencies, and typical contingencies include things like a home inspection, an appraisal and approval for a home loan. 

Since there are many legal matters involved with a home purchase, you’ll work with your real estate agent and an attorney to make sure that all these contingencies are satisfied. During this process, you’ll likely hear the term “due diligence,” which refers to the process a lawyer undergoes when he’s checking to see if the seller can legally sell you the house. When all the financial and legal matters have been squared away, it’s time to officially seal the deal with a home closing.

Sign on the dotted line
Once you’ve been approved for a home loan and all contingencies have been met, you can schedule the closing. This is the event at which you will legally purchase a home. You can think of a home closing as an arbitration to handle the transfer of property from the seller to the buyer. Since both parties are involved, both seller and buyer show up to the closing. A closing agent, a neutral third-party who is in charge of officially recording mortgage and real estate transactions with the court, will be in charge of the proceedings.

Three important things happen at a home closing: 

• The home’s title will be transferred to you.
• Your homeowner’s insurance coverage (which you should have secured and paid for by closing day) officially kicks in.
• You officially commit to the mortgage.

To make things official, you will sign a very large stack of legal contracts. These home closing documents will detail the financial and real estate transactions involved in the home purchase. You’ll go over these documents with the closing agent, checking for errors before you sign your name on the dotted line. This whole process can take as little as an hour, though it might take longer, depending on how complicated the sale is.

Hand over your cash
At the same time that you sign the legal documents, you’ll also be expected to plunk down cash to cover a down payment and closing costs. The amount of closing costs you pay depends on the terms of your home loan and the terms you’ve negotiated with the seller. Typical down payments range from three to twenty percent of the purchase price, and closing costs usually come in at a few thousand dollars. You’ll be expected to present a certified check to cover all of these costs (your lender can provide you with exact closing cost figures ahead of time.)

If you decide to pay points at closing, you’ll also be expected to pay for them at this point. Many home buyers who expect to live in their homes for five years or more pay what are referred to as “discount points,” or fees that reduce their interest rate — saving them money over the life of their home loan. Paying points at closing is very common.

Leave a homeowner
When all’s said and done, you’ll leave your home closing with a stack of important documents proving you now own a house and — best of all — you’ll have the keys to your new place!