Closing (Real Estate)
Closing is the final step in a real estate transaction where ownership transfers from seller to buyer, documents are signed, funds are exchanged, and the deed is recorded.
Exam Tip
Closing Disclosure must be received 3 BUSINESS DAYS before closing. Compare to Loan Estimate.
What is Closing?
Closing (also called settlement or escrow closing) is the final step in buying or selling real estate. It's when the transaction is completed, ownership transfers, and you get the keys.
What Happens at Closing
| Step | Description |
|---|---|
| 1. Review documents | Read and understand all paperwork |
| 2. Sign documents | Loan docs, deed, disclosures |
| 3. Pay closing costs | Funds transferred (wire or cashier's check) |
| 4. Receive deed | Title transfers to buyer |
| 5. Record deed | Filed with county recorder |
| 6. Get keys | Take possession of property |
Key Closing Documents
| Document | Purpose |
|---|---|
| Closing Disclosure | Final loan terms and costs |
| Deed | Transfers ownership |
| Promissory Note | Your promise to repay loan |
| Mortgage/Deed of Trust | Secures loan with property |
| Title Insurance | Protects against title defects |
| Affidavits | Various sworn statements |
Closing Costs
| Buyer Typically Pays | Seller Typically Pays |
|---|---|
| Loan origination fee | Real estate commission |
| Appraisal | Transfer taxes (varies) |
| Title insurance (lender's) | Title insurance (owner's) |
| Home inspection | Prorated taxes owed |
| Prepaid taxes/insurance | |
| Recording fees |
Closing Disclosure (CD)
Must be received 3 business days before closing. Compare to Loan Estimate to catch changes.
Who Attends Closing
- Buyer and seller (or representatives)
- Real estate agents
- Closing agent/attorney
- Title company representative
- Lender representative (sometimes)
Study This Term In
Related Terms
Escrow
Real EstateEscrow is a neutral third-party arrangement where money or documents are held until all conditions of a real estate transaction are met.
Deed
Real EstateA deed is a legal document that transfers ownership (title) of real property from one party to another.
Title Insurance
Real EstateTitle insurance is a policy that protects property buyers and lenders against losses from defects in title, such as liens, encumbrances, or ownership disputes that existed before purchase.
Closing Costs
Real EstateClosing costs are fees and expenses paid at the real estate closing beyond the property price, typically 2-5% of the loan amount, including lender fees, title insurance, escrow, and prepaid items.