4 essential closing documents you need to sign

Buying or selling a house can be an exciting but stressful process, especially when it comes to the closing process, which involves escrow, title companies, appraisals and more. On the day of closing, several closing documents need to be signed, regarding the property and your financing, and it's essential to understand what these documents are, what they mean, and why they’re necessary. 

What are closing documents?

Closing documents are the legal papers that finalize the transfer of ownership of the property from seller to buyer, including all financial obligations and other details of the transaction. Some of the most important documents you’ll sign include the deed, bill of sale, and mortgage or loan documents. Your real estate agent or lawyer will typically provide you with a comprehensive list of the papers you’ll be asked to sign, and will be available to answer any questions you may have.

But what do these documents actually mean? Let's take a closer look at some of the most commonly signed papers involved in a home sale:

• Deed: A deed is a legal document that transfers the ownership of a property from the previous owner to the buyer. It contains essential information about the property, including the name of the owner, property description, and details about any liens or restrictions. There are different types of deeds, and the type you receive will depend on the situation. Deeds are critical because they prove ownership of a property and whether there are any legal obstacles that prevent you from using it.
• Bill of sale: A bill of sale is a legal document that records the transfer of personal property between two people. This document lists the items being sold, the purchase price, and the date of the sale. In real estate, a bill of sale is typically used for items such as furniture or appliances that are included in the sale of the property. This document protects both the buyer and the seller by providing an official record of the transaction.
• Mortgage or loan documents: When you take out a mortgage or loan, you'll be presented with a series of legal documents that outline the terms of the purchase agreement. These documents can include a mortgage note and a deed of trust or mortgage. A mortgage note is a promise to repay the money you borrow, and a deed of trust is a security interest that the lender holds in the property. These documents outline the payment schedule, interest rate, and penalties for late payments or default. They're essential for protecting your rights as a borrower and ensuring that the lender receives the money they're owed.
• Closing disclosure: This document summarizes the details of your mortgage or loan transaction, outlining the loan terms, interest rate, monthly payments, and closing costs. It also includes information about any fees or charges that the borrower may be responsible for paying. CDs in real estate used to ensure that the borrower understands all the terms and conditions of the loan and that the lender is complying with all applicable regulations.

How do I get a copy of my closing documents?

You should expect your real estate agent to provide the documents listed above at the closing, and they’ll provide copies once everything’s been signed. It's a good idea to review these documents with your agent before closing day so that you can be prepared and have a clear understanding of what you'll be signing. Also, keep in mind that you’ll need to bring a valid photo ID to the closing, so be sure to have that ready.

What if I don't understand a particular document?

If any section of the closing documents confuses you, don't hesitate to ask questions. Seek clarification from your lender, real estate agent. Remember, it's crucial to be fully informed before you sign anything.

Can I make changes to the documents?

Changes to the closing documents should be discussed and agreed upon before the closing date. If you notice errors or discrepancies during the closing, bring them to the attention of the involved parties to rectify the situation promptly.

What happens after you sign closing documents?

Depending on your state and county, after signing at closing you may receive the original deed or other documents right away, or it may take a few days or even weeks to receive them. 

Your lender will typically receive copies of all the documents, and you’ll receive a copy of your settlement statement, which outlines all the fees and expenses associated with the transaction. If there are any issues or discrepancies with the documents, your agent will work with you to resolve them.

Here's what not to do after closing on a house

Can a seller sign closing documents early?

It's rare for a seller to sign closing documents early, but it can happen under certain circumstances. Some sellers may need to sign documents in advance if they won't be able to attend the closing for some reason.

If the buyer decides to back out of the transaction after the seller has already signed, the seller may be in a tricky legal situation. To avoid any issues, it's best to sign all closing documents at on the day of closing.

→ Learn more about what the seller does after closing

Are closing documents public record?

Yes — most closing documents are public record. This means that anyone can access these documents and see the details of the transaction, including the sale price. If you're concerned about your privacy, you can request that some documents be kept private, such as the mortgage agreement or the promissory note. Other documents, like the deed and the title insurance, will always be public record.

What documents should I bring to the closing?

On the closing day, make sure to bring the following items and review the requirements with your agent beforehand to avoid any last-minute surprises.

• Identification: A government-issued photo ID, such as a driver's license or passport, to verify your identity.
• Proof of homeowners insurance: Your lender will require evidence that you have obtained adequate insurance coverage for the property.
• Requested documents: Any relevant paperwork requested by your lender, such as bank statements or employment verification documents. (Here’s a recap of mortgage documents you need when filling out your loan application. 
• Money for expenses: A certified or cashier's check for the closing costs and any other expenses you agreed to cover. The amount will be specified in the closing disclosure form provided by your lender a few days before the closing.

Closing on a house can be intimidating, and signing all those documents may seem overwhelming. Remember that your real estate agent and lawyer are there to guide you through every step of the way and answer any questions you may have. So, take a deep breath, stay informed, and enjoy the excitement of your new home!

FAQs

Still have questions? Here’s what else to know about closing documents. 

Q: What is the final closing document called?

The final closing document is commonly known as the "settlement statement" or "closing statement." It provides a detailed breakdown of all the financial transactions that occurred during the closing process, including the final purchase price, closing costs, adjustments, and credits.

Q: Which document is the most important at closing?

While each closing document serves a specific purpose, one of the most important documents at closing is the deed. The deed is a legal document that transfers ownership of the property from the seller to the buyer. It is essential because it establishes the buyer's legal right to the property.

Q: Do I need an attorney to review the closing documents?

While legal requirements may vary depending on the jurisdiction, it is generally advisable to have an attorney review the closing documents. They can ensure that the documents accurately represent the agreed-upon terms, protect your legal rights, and address any potential legal issues related to the transaction. An attorney can provide valuable guidance throughout the closing process.

Q: Can I review the documents before the closing day?

Yes, you have the right to review the closing documents before the actual closing day. Your lender or real estate agent should provide them in advance, allowing you time to seek clarification or legal advice if needed.