What Happens at Closing, A Step-by-Step Guide

Closing day is the finish line of your home purchase journey. It can feel overwhelming, a stack of documents, a room full of people, and a lot of money moving around. Here is exactly what to expect so nothing catches you off guard.

What Is Closing?

Closing, also called settlement, is the final step in a real estate transaction. It is when ownership of the property legally transfers from the seller to the buyer, and when all the financing, including your first mortgage and any DPA funds, is officially put in place.

Who Is in the Room?

Depending on your state, closing may involve a closing attorney, an escrow officer, your real estate agent, the seller's agent, and sometimes the seller. Your lender typically does not attend in person but has provided all the loan documents in advance.

What Documents Will You Sign?

Expect to sign a significant number of documents. The most important ones include:

• Closing Disclosure: A detailed summary of all your loan terms, monthly payments, and closing costs. You should receive this at least three business days before closing.
• Promissory Note: Your legal promise to repay the first mortgage.
• Deed of Trust or Mortgage: The document that gives your lender a security interest in the property.
• DPA Note and Deed of Trust: If you are using Dream Home Fund DPA, you will also sign the silent second mortgage note and deed of trust.
• Title Documents: Documents transferring ownership from the seller to you.

What Money Changes Hands?

At closing you will typically need to bring:

• Closing costs: These vary but typically range from 2% to 5% of the purchase price. They include lender fees, title insurance, prepaid taxes and insurance, and other charges.
• Down payment: Your portion of the down payment after DPA funds are applied.

Funds must typically be wired in advance or brought as a certified check. Personal checks are generally not accepted. Confirm the exact amount and wire instructions with your escrow officer at least 48 hours before closing.

How Long Does Closing Take?

Plan for one to two hours. If everything is in order, it could be shorter. If there are last-minute issues or questions about documents, it could run longer. Bring your ID, your checkbook as a backup, and patience.

What Happens After You Sign?

After all documents are signed and funds are confirmed, the transaction is recorded with the county recorder's office. Once recorded, you are the legal owner of the home and receive the keys. Congratulations, you are a homeowner.

How Does DPA Work at Closing?

Dream Home Fund coordinates with your escrow officer to ensure DPA funds are ready at closing. The funds are disbursed directly into escrow and applied toward your down payment. The silent second mortgage is simultaneously recorded as a lien on the property. Your escrow officer handles all of this, you just need to show up and sign.