Closing Disclosure
The final terms and costs of your loan, and on a purchase the costs between you and the seller. It replaced the old settlement statement and Truth-in-Lending forms.
Closing
Guide to closing: what you sign and what it costs
Closing is where you sign your loan documents and, on a purchase, the home becomes yours. Here is how it works, what you sign, what it costs, and how to plan the money you bring.
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On this page
Jump to a section.
- How closing works
- Before closing day
- The documents you sign
- The costs, explained
- Ways to manage them
- Your rate lock
- After you sign
- Common questions
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The process
How closing works
The process starts with your offer, the purchase contract and your loan application, and ends when the documents are signed and the money changes hands. Several people take part: you, the seller, the real estate agents, the lender, the title or escrow company and, in some areas, attorneys.
Gathering documents takes time, and a closing date can move if something is late. If you are also selling a home, keep your moving plans flexible.
A federal law, the Real Estate Settlement Procedures Act, governs much of the process. Your lender gives you a Loan Estimate after you apply and a Closing Disclosure before closing, and must give you the government's home loan toolkit booklet when you apply for a purchase loan.
Your two key forms
- Loan Estimate: the estimated rate, payment and closing costs, after you apply
- Closing Disclosure: the final figures, before you close
- Compare them line by line and ask about any change
Before closing day
Before closing day
Closing usually takes place at the office of a title company, an escrow company or an attorney, who acts as the closing agent. On a purchase, the seller may sign at the same meeting or separately; in some states the two happen at different times.
You receive your Closing Disclosure before closing. It shows the final rate, payment, loan amount and closing costs. Compare it with your Loan Estimate and ask your loan officer about anything that changed.
Your loan officer stays in touch through closing and can answer questions about your figures, your first payment date and the amount to bring.
What to bring
- Photo identification for everyone signing
- The funds to close, usually sent by wire transfer or a cashier's check; confirm the instructions by phone with the closing agent, never only by email
- Proof of homeowners insurance, if not already sent
- Any documents your closing agent or loan officer asked for
The paperwork
The documents you sign
Promissory note
Your promise to repay the loan, with the interest rate, the payment, the length of the loan and what happens if a payment is late.
Mortgage or deed of trust
Pledges the home as security for the loan, so the lender can take it through foreclosure if the loan is not repaid. Some states use a deed of trust instead of a mortgage.
Other closing forms
Forms such as the initial escrow account statement, tax forms and any program-specific documents. The closing agent explains each one.
What you pay
The costs, explained
Your Loan Estimate lists each one. The amounts depend on the price, the loan, the program and where the home is.
Lender charges
Origination, processing, underwriting and similar fees, and any points you choose to pay to lower your rate. A lender credit can offset some costs in exchange for a higher rate.
Appraisal and credit report
The appraisal of the home and the credit report, paid to the companies that provide them. Some loans also need a flood check or a tax service.
Title services and insurance
The title search, the closing or settlement fee, and title insurance: a lender's policy, and an owner's policy if you choose one or the contract requires it.
Recording fees and transfer taxes
Fees to record the deed and mortgage, and any transfer taxes. In many areas these are among the largest costs.
Prepaid items and escrow
Interest from closing to the end of the month, the first year of homeowners insurance, and deposits to your escrow account for property taxes and insurance.
Inspections and survey
A home inspection and pest inspection are strongly recommended on a purchase. A survey may be required in some areas.
Planning
Ways to manage closing costs
- Shop the services you can shop for. Your Loan Estimate lists the services you may choose yourself, such as title services in many areas.
- Negotiate with the seller. Sellers can agree to pay part of your closing costs, within limits each loan program sets.
- Compare points and lender credits. Paying points lowers the rate; taking a lender credit lowers the cash you need. See should I consider paying points?
- Ask about assistance. Some buyers can get help with the down payment and closing costs. See down payment assistance.
- Bring the right funds. The closing agent tells you the exact amount and how to send it. Confirm wiring instructions by phone with a number you trust before sending money.
Timing
Make sure your rate lock lasts
Appraisers, title companies and underwriters can get busy, and a closing can slip. Choose a lock period that covers your closing date with some room to spare, and keep an eye on its end date. If a lock runs out, the loan may need to be relocked at a different price. Our rate lock policy explains how it works with us.
After you sign
After you sign
- Purchase: once everything is signed and the money is sent, the deed and mortgage are recorded and the home is yours.
- Refinance of your main home: federal law gives you a short period after signing to change your mind, so the money is not paid out until that time has passed. The closing agent explains the dates.
- Your first payment: your Closing Disclosure shows when it is due and the closing documents say where to send it.
- Automatic payments: you can usually set up automatic monthly payments with your servicer.
Questions
Common questions about closing
Will I need an attorney at closing?
In some areas an attorney normally handles closings, and in some it is required. Elsewhere it is less common. You may always have your own attorney review the documents and attend if it makes you more comfortable.
Can I see the documents before closing?
Yes. You receive the Closing Disclosure in advance, and you can ask the closing agent or your loan officer for copies of the other documents once they are prepared, usually shortly before closing.
Who will be at the closing?
The closing agent runs the meeting. On a purchase, the seller and the real estate agents may be there. If a question comes up that the closing agent cannot answer, they can call your loan officer.
I cannot attend the closing. What are my options?
Tell your loan officer early. Depending on the loan and the state, someone you trust may be able to sign for you under a power of attorney, or you may be able to sign at a different place or time. The lender and the closing agent must approve the arrangement in advance.
Where will the closing take place?
Usually at the closing agent's office, near the home. In some cases the closing agent can arrange for you to sign elsewhere.
Have a question we did not answer?
Talk it through with a licensed loan officer, get a quote, or apply online.
This page is general information, not a commitment to lend. Programs, terms and eligibility depend on credit, income, property and underwriting review and are subject to change without notice.