What Documents Do You Sign at Closing?

A real estate closing marks the culmination of the home buying and selling process, signifying the official transfer of property ownership and the finalization of all financial agreements. During this stage, numerous documents are signed by involved parties, formalizing the terms and conditions agreed upon throughout the transaction. The meticulous review and execution of these documents ensure that all legal and financial obligations are met, enabling a smooth transition of ownership.

Documents Related to Your Loan

A significant portion of documents signed at closing relate directly to the financing of the property. The Promissory Note is one of the primary financial instruments, representing the borrower’s formal promise to repay the loan amount to the lender. This document details the loan’s principal sum, the agreed-upon interest rate, and the complete repayment schedule, including the frequency of payments. It serves as legal evidence of the debt and the lender’s right to collect payments according to the specified terms.

Accompanying the Promissory Note is either a Mortgage or a Deed of Trust. This document pledges the acquired property as collateral for the loan, granting the lender a security interest in the asset. It outlines the conditions under which the lender can initiate foreclosure proceedings if the borrower fails to meet the repayment obligations. This instrument is typically recorded in public records, providing notice of the lien on the property.

Another document is the Closing Disclosure, a standardized five-page form provided by the lender. This document presents a comprehensive breakdown of all final loan terms and associated closing costs. It details the loan amount, interest rate, and a projection of monthly payments, which often include principal, interest, property taxes, and insurance. Borrowers are legally entitled to receive this form at least three business days before the scheduled closing date, allowing ample time for review and comparison with the initial Loan Estimate to identify any discrepancies.

Documents Related to Property Transfer

Central to the transfer of real estate ownership is the Deed, the legal instrument that formally conveys title from the seller to the buyer. This document accurately identify both parties involved in the transaction. It also contains a precise legal description of the property, which uniquely identifies its boundaries and location. Once executed, the deed is typically recorded with the local county recorder’s office, creating a public record of the ownership change.

There are different forms of deeds, such as a Warranty Deed or a Quitclaim Deed, each offering varying levels of protection to the buyer regarding the property’s title. While they differ in the guarantees provided by the seller, their fundamental purpose remains the same: to legally transfer ownership. The deed ensures that the buyer receives clear title to the property, free from undisclosed claims or encumbrances. Its proper execution is essential for establishing the buyer’s legal claim to the real estate.

If the real estate transaction includes personal property, such as appliances, window treatments, or certain pieces of furniture, a separate Bill of Sale may also be signed at closing. This document specifies the personal items being transferred along with the real estate. The Bill of Sale details the description of the items, their agreed-upon value, and the terms of their transfer, ensuring clarity for both buyer and seller.

Other Important Closing Documents

Beyond loan and property transfer documents, several other agreements and disclosures are commonly signed at closing. Affidavits are sworn statements of fact, and two common types are the Affidavit of Identity and the Affidavit of Title. An Affidavit of Identity helps clarify potential name discrepancies for individuals involved in the transaction. The Affidavit of Title is a seller’s sworn statement confirming their ownership of the property and disclosing any known issues like undisclosed liens or boundary disputes.

Occupancy Agreements are used when the timeline for vacating and moving into a property does not align perfectly with the closing date. A post-closing occupancy agreement allows the seller to remain in the property for a specified period after ownership has transferred, often involving a rental payment to the new owner. Conversely, a pre-closing occupancy agreement permits the buyer to move into the property before the official closing, under agreed-upon terms. These agreements define responsibilities like rent, utilities, and property condition during the temporary occupancy period.

While largely superseded by the Closing Disclosure for most residential mortgages, the Truth in Lending Disclosure (TILA) may still be provided for specific loan products, such as reverse mortgages or home equity lines of credit. This disclosure aims to promote transparency in lending by detailing the costs of credit, including the annual percentage rate (APR) and finance charges.

If the loan includes an escrow account for property-related expenses, a Tax and Insurance Escrow Agreement will be signed. This agreement outlines how the lender will collect and manage funds from the borrower to cover future property tax bills and homeowner’s insurance premiums. A portion of the monthly mortgage payment is typically allocated to this escrow account, ensuring that these recurring expenses are paid on time. This arrangement provides convenience for the homeowner and protection for the lender’s interest in the property.