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Buying your first home is a monumental milestone, but the final phase—the closing process—can feel overwhelming if you’re not prepared. This guide breaks down the closing process for first-time buyers, helping you understand what to expect, avoid common pitfalls, and confidently navigate each step.
What Is the Closing Process?
The closing process is the final stage in purchasing a home, where ownership officially transfers from the seller to the buyer. It involves signing numerous legal documents, settling financial transactions, and meeting all lender and legal requirements.
Typically, the closing process spans 30 to 45 days after a seller accepts your offer. Let’s walk through what happens during this period.
Step-by-Step Breakdown of the Closing Process
1. Opening Escrow
Once your offer is accepted, a neutral third party (the escrow agent) opens an escrow account to securely hold funds and documents during the transaction. This account protects both buyer and seller until all terms are met.
Ready to make an offer? Learn how to craft a competitive home offer.
2. Conducting the Home Inspection
A home inspection is crucial. It reveals issues that might not be visible during a tour, such as roofing problems, plumbing issues, or foundation concerns. If serious problems arise, you can negotiate repairs or credits with the seller.
Unsure what to look for? Read our guide on How to Prepare for Your First Home Inspection.
3. Appraisal Ordered by the Lender
If you’re using a mortgage, your lender will order a home appraisal to verify the property’s market value. This ensures the loan amount aligns with the property’s worth.
- If the appraisal is lower than the sale price, you may need to renegotiate or cover the difference.
- If the appraisal is higher, great news—you already have some equity!
4. Securing Final Mortgage Approval
Even if you’ve been pre-approved, the lender will now perform a more detailed underwriting process. Be prepared to provide:
- Updated pay stubs and bank statements
- Proof of employment
- Documentation of assets and debts
Avoid making any major financial changes (e.g., new credit cards or job changes) during this time, as they can jeopardize your loan.
5. Title Search and Insurance
The title company performs a title search to confirm that the seller has legal ownership and that there are no outstanding liens or disputes. You’ll also need to purchase title insurance to protect yourself from future claims.
6. Homeowners Insurance and Final Walkthrough
Before closing, secure homeowners insurance, which your lender will require. Also, you’ll conduct a final walkthrough—usually 24 to 48 hours before closing—to ensure the property is in the expected condition and any agreed-upon repairs were completed.
7. Closing Disclosure Review
At least 3 days before closing, you’ll receive a Closing Disclosure (CD). This document outlines your final loan terms, monthly payments, and all fees and closing costs.
Carefully review the CD for discrepancies. Compare it to the Loan Estimate (LE) you received at the start of the mortgage process.
8. Signing Day (Closing Day)
On closing day, you’ll sign a stack of documents including:
- The promissory note (your agreement to repay the loan)
- The deed of trust (secures the loan with your property)
- The settlement statement
- The deed (transferring ownership to you)
Once documents are signed and funds are transferred, the deed is recorded with the local government—congratulations, you’re a homeowner!
Ready to start your homeownership journey? Connect with a trusted real estate agent.
What Are Typical Closing Costs?
First-time buyers should prepare for 2% to 5% of the purchase price in closing costs, which may include:
- Loan origination fees
- Appraisal and inspection fees
- Title insurance
- Escrow fees
- Prepaid property taxes and insurance
Some lenders offer no-closing-cost loans, or you may negotiate for the seller to cover some costs (known as seller concessions).
FAQs About the Closing Process
How long does the closing process take?
Typically, 30 to 45 days, though it can be shorter or longer depending on loan approval, inspection results, and title issues.
Can I back out of the deal before closing?
Yes, but it may cost you. If you don’t have a valid contingency (like financing or inspection), you could forfeit your earnest money deposit.
What should I bring to closing?
Bring a valid ID, cashier’s check or wire confirmation for your down payment and closing costs, and a copy of the Closing Disclosure.
Read Next
Get Expert Financing
- Matched with investor-friendly lenders
- Fast pre-approvals-no W2s required
- Financing options fro rentals, BRRRR, STRs
- Scale your portfolio with confidence
Our advice is based on experience in the mortgage industry and we are dedicated to helping you achieve your goal of owning a home. We may receive compensation from partner banks when you view mortgage rates listed on our website.
