Before Closing

• According to the financial website LendingTree, the home closing process begins when a prospective homebuyer submits an offer to purchase. Home shoppers typically submit a deposit, or earnest money, along with the offer, and may exchange a barrage of counteroffers with the property seller. Once the two parties reach an agreement, they must meet any contingencies defined in the offer contract. Some typical contingencies, according to LendingTree, include the buyer's ability to secure financing and the home's ability to pass inspection. The home inspection itself is also a component of closing, as many mortgage lenders require homebuyers to verify the house's physical state as a condition of the loan. Depending on state requirements, a final contract may also become necessary after both parties meet all contingencies. The final contract will likely specify a closing date, and both the seller and the buyer will perform additional steps when that date arrives.
  
  

At Closing

• At the time of closing or shortly before, a title agent will present the homebuyer with a settlement sheet. This document, required by the U.S. Department of Housing and Urban Development, or HUD, details all of the charges and costs that both the buyer and seller must pay. LendingTree advises that the Real Estate Settlement Procurement Act mandates title agents provide both the buyer and the seller with a copy of this document. In addition to the settlement sheet, the buyer will also receive a substantial amount of paperwork to review and sign; some of this paperwork includes a title search, title insurance and an agreement to repay the mortgage loan. After signing the closing documents, the buyer pays his share of the closing costs, often including the first month's mortgage payment, and completes any other outstanding final arrangements. At some later point, the transaction goes into settlement and the buyer formally assumes ownership.
  
  

Costs

• During the closing process, both the buyer and seller pay a number of closing costs. The home buying website Home Closing 101 notes that these costs typically include the real estate broker's commission and any fees, as well as any loan fees that the mortgage lender charges. Closing costs also include any expenses, like insurance and taxes, that the buyer must pay in advance. If the seller owes any outstanding taxes or homeowners association fees, these debts must be brought current at closing, and the amounts will appear as closing costs on the settlement sheet. Other closing costs include title fees for research and title insurance, government filing fees that cover the cost of officially recording the transaction and other miscellaneous charges.
  
  

Recommendations

• Homebuyers can take a number of steps to ensure a smooth closing process, according to the lender Wells Fargo. Buyers should stay in touch with the lender and real estate agent throughout the process and take advantage of the closing period to review and update property insurance policies. Buyers should also study the lender's escrow calculations and be ready to pay any unexpected costs at closing.