Closing is the last step in the home-buying process. Closing happens in a meeting between a combination of the buyer, the buyer's agent, the seller, the seller's agent and a closing agent. The closing agent is either an attorney or a representative from the title company which manages the home's ownership paperwork.

What are closing costs?

Both the buyer and seller may pay closing fees. As part of your mortgage application you will get a loan estimate, or LE, showing your potential closing costs. Prior to closing you will receive a Closing Disclosure, or CD, showing your final costs. Costs can include but are not limited to:

  • An origination fee
  • Discount points
  • An appraisal fee
  • Credit report
  • Title search
  • Recording fees

Through the course of the closing, several documents are reviewed and signed. Once all of the costs due at closing have been paid and the paperwork has been signed, you can collect your keys and get ready to move into your new house.

What is a loan estimate?

As part of the mortgage application process you will get a loan estimate showing your potential closing costs. An itemized list of closing costs must be provided to you within three business days of your mortgage application by law. Your final closing costs should reasonably reflect your loan estimate.

What is a closing disclosure?

For loans that require a Loan Estimate, or LE, and that proceed to closing, creditors must provide a Closing Disclosure, or CD, which is a final disclosure reflecting the actual terms of the transaction. The CD generally must contain the actual terms and costs of the transaction.

How much are closing costs?

Closing costs are typically two to five percent of the loan amount. However, they can vary depending on your lender, location and property. Since your closing costs depend on your loan amount, they're an important consideration when working with your real estate agent to decide how much to offer on a house.

Who pays closing costs?

Although both the buyer and seller typically pay closing costs, in certain situations you can negotiate to have the seller pay a portion or even all of your closing costs.

How long does it take to close on a house? 

Many factors go into determining how long the closing process is likely to take — it depends primarily on your lender. You should receive a closing date on your purchase agreement. The type of mortgage loan can also impact how long it takes to close on a house. FHA loans typically take a little longer than conventional loans. It's important to check in with your mortgage loan officer and real estate agent to get regular updates throughout the course of the process.