I'm about to close on a real estate purchase transaction with a mortgage. What can I expect in the mortgage closing proc

The closing, sometimes called consummation or the settlement, is a key final step in the purchasing and financing of a home.

Your lender transfers money that you are borrowing to the settlement agent for delivery to the seller on your behalf, and the seller signs a document called a "deed," which is the legal document making you the owner of the home. The settlement agent, often a title company or escrow company (in most western states) or a closing attorney (in some eastern states) prepares additional documents that support the transfer of the home to you and then records these documents with the county registrar’s office or county register of deeds. You may also have to sign additional documents that identify your rights and obligations as the homeowner and loan borrower.

Tip

At least three business days before closing, you receive your Closing Disclosure, which lays out the terms of the loan including an itemized list of fees associated with the closing. Take time to review the Closing Disclosure, compare it to your Loan Estimate and make sure the loan terms are what you agreed to. Let your lender or settlement agent know if you believe there are mistakes and ask about anything you don’t understand.

Here’s what you can expect:

1. You will receive a lot of documents

Expect to receive and/or sign many documents. These documents will include:

• Your Closing Disclosure
• Your promissory note, which is your promise to repay the mortgage loan to your lender
• The mortgage, also known as the security instrument or deed of trust. By signing this document, the property is collateral for the loan and you agree that the lender may foreclose on your home if you fail to repay your mortgage.
• The deed, which transfers legal ownership of the property to you

See an interactive sample Closing Disclosure and get our guide to other closing forms.

Note: For some of the documents you sign, like the deed of trust, your signature needs to be notarized.

2. Transfer of funds

Money may also change hands. The closing or settlement agent is responsible for collecting the money from the parties and disbursing it according to the terms of the sales contract and the loan. The total sum you will need to bring will net out the down payment and any deposit you’ve already made, as well as costs associated with the closing. Sometimes the seller may pay costs related to closing to the lender. This is determined by the terms of your purchase contract. The lender provides the funds from the mortgage loan. The closing agent then pays out the price of the home to the seller and distributes the closing costs to the various closing service providers.

3. Taxes and insurance

You will need to show proof of homeowners insurance so that the lender will fund the mortgage loan. If your loan includes an escrow account, the account is set up and you make an initial deposit.

4. Transfer of Ownership

Once all of the documents have been signed, funds have been disbursed, and the closing has been finalized, the transfer of ownership occurs. The seller, or a representative of the seller, gives you the keys to the new home, and the closing company, title company, escrow company, or attorney submits the mortgage and transfer of ownership documents to the county registrar’s office to be officially recorded.

Get the CFPB’s closing checklist to make sure you are prepared for your closing.

Note: You will not receive a Loan Estimate or Closing Disclosure if you are shopping for:

• A reverse mortgage
• A home equity line of credit (HELOC)
• A manufactured housing or mobile home loan not secured by real estate
• A subordinate loan through certain types of homebuyer assistance programs

For these kinds of loans, you should receive Truth-in-Lending disclosures. If you are shopping for a reverse mortgage, you will also receive a Good Faith Estimate (GFE) and a HUD-1 Settlement Statement.

If you have a problem with your mortgage closing process, discuss it with your lender. You can also submit a complaint to the CFPB online or by calling (855) 411-CFPB (2372). We’ll forward your complaint to the lender and work to get you a response, generally in 15 days.

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