Understanding the Closing Process

1. The Contract Is Signed

The closing process begins when the buyer and seller sign a purchase agreement. The contract usually identifies:

• The purchase price
• The property address
• The proposed settlement date
• The earnest money deposit
• Financing and inspection contingencies
• Items included in the sale
• Each party’s responsibilities

2. The Settlement File Is Opened

The settlement company opens a file and begins gathering the information needed to coordinate the transaction. Parties should provide requested information promptly and through approved, secure communication methods.

• The signed purchase agreement
• Buyer and seller contact information
• Lender and real estate agent information
• Loan details
• Homeowners’ association or condominium information
• Existing mortgage or lien information
• Identification and tax-related documentation

3. The Earnest Money Deposit Is Delivered

The buyer may be required to submit an earnest money deposit according to the contract. The funds are generally held in an escrow or trust account until properly disbursed under the contract, applicable law, and written settlement instructions.

4. The Title Search Is Completed

A title search examines relevant public records to identify matters affecting ownership and determine what must be addressed before transfer and issuance of a title insurance policy.

• Current and prior owners
• Mortgages and deeds of trust
• Judgments or tax liens
• Unpaid property taxes
• Easements and restrictions
• Recording errors
• Probate, divorce, bankruptcy, or estate-related matters

5. Title Issues Are Reviewed and Addressed

If the title search reveals a problem, the appropriate parties work to resolve it before settlement. Some matters can be resolved quickly, while others may require additional documents, third-party cooperation, or legal guidance. The settlement company cannot guarantee that every issue will be resolved by a particular date.

• Requesting a mortgage payoff
• Obtaining a lien release
• Correcting a name or document error
• Securing missing signatures
• Reviewing estate or probate documents
• Confirming property-tax or homeowners’ association balances

6. Financing and Other Requirements Are Finalized

When the buyer is using a mortgage, the lender completes its underwriting and approval process separately from the title examination. The buyer may need to provide updated financial documents, satisfy loan conditions, obtain homeowners’ insurance, and complete final lender verification.

Buyers should avoid opening new credit accounts, making large purchases, changing employment, or moving money between accounts without first speaking with the lender.

7. Settlement Figures Are Prepared and Reviewed

As closing approaches, the lender and settlement company coordinate the financial details. For many consumer mortgage transactions, the lender must ensure the buyer receives the Closing Disclosure at least three business days before consummation. Certain changes may require additional review time.

• Purchase price and deposit credits
• Loan proceeds and lender charges
• Title and settlement charges
• Property taxes, assessments, and recording fees
• Homeowners’ association charges
• Real estate commissions
• Seller mortgage payoffs
• Other agreed credits or adjustments

8. Funds and Documents Are Securely Verified

Before closing, the settlement company confirms the documents, identification, signatures, and funds required. Wire fraud is a serious risk in real estate transactions.

• Never rely solely on wiring instructions received by email.
• Verify instructions using a trusted telephone number obtained independently.
• Do not use a phone number contained in an unexpected email.
• Be suspicious of last-minute changes to wiring instructions.
• Never send sensitive financial information through unsecured email.
• Contact the settlement company immediately if anything appears unusual.

9. Settlement Takes Place

At settlement, the parties sign the documents required to complete the transaction. Settlement may occur in person, remotely, or through a combination of electronic and paper documents when permitted.

Before signing, ask questions about anything you do not understand. The settlement professional can explain the purpose of documents but may not provide legal, tax, or financial advice unless properly qualified.

• The deed and loan documents
• Settlement statements and tax forms
• Affidavits
• Title insurance documents
• Instructions and required disclosures

10. Funding, Recording, and Disbursement Are Completed

Signing documents does not always mean the transaction is immediately complete. Required signatures, available funds, lender conditions, closing authorization, and recordable instruments must be confirmed first.

After applicable requirements are satisfied, documents are submitted to the land-records office and funds are disbursed according to final settlement documents and authorized instructions.

What Happens After Settlement?

Even after the parties leave the closing table, additional work may remain.

• Confirm recorded documents
• Complete final escrow accounting
• Send payoffs and authorized payments
• Deliver title insurance policies
• Retain transaction records as required
• Help address appropriate post-closing questions

How to Help Keep Your Closing on Track

• Respond promptly to requests for information
• Provide accurate names and contact details
• Review documents before settlement
• Keep the lender informed of financial or employment changes
• Bring acceptable identification
• Confirm how funds must be delivered
• Verify wiring instructions independently
• Raise questions as early as possible