Congratulations! You have passed the most challenging part of the home buying process and the closing day is And last but not least approach.

As you count down the days until you’re sitting at that big table with a pen in your hand, ready to sign all those buyer closing documents, you may want to reel in your excitement. You’ll be busy on closing day, and it’s always helpful to know what’s coming – because there are a lot of documents to sign!

A woman about to examine closing documents when you are a home buyer.
Source: (Adeniji Abdullahi A/Unsplash)

Closing documents for buyers: the basics

You will need to bring or sign a whole host of documents to complete the purchase. Here are 15 important ones to remember.

1. Photo identification

The most obvious document to have is a valid photo ID. You have to prove your identity because you sign several documents (namely the title and loan documents), which must be notarized.

You can use your state issued driver’s license (or identification card only) or your passport. Emeric Szalay, a top-selling real estate agent in Indiana who works with 78% more single-family homes than the average real estate agent in his area, shares:

“We’ve had closures that have stopped in the middle of closure because the buyer had an expired driver’s license. They had to run to the DMV to update it and then bring it back. ”

2. Cashier’s check (or bank transfer)

A cashier’s check is the next most important thing to bring with you; otherwise the deal will not go through. This piece of paper shows that you have the money to cover the down payment, closing costs, prepaid interest, taxes and insurance.

However, most buyers pay by bank transfer; often writing a check is not an option.

“Every transaction will be a little different. In Indiana, if it is less than $10,000, the buyer can present a certified check to the title company. However, if it’s over $10,000, the money must be transferred directly to the title company,” explains Szalay.

3. Proof of homeowner’s insurance

Lenders must see proof of the homeowner’s current insurance (many lenders require you to pay upfront for a one-year policy) and be in good standing before granting you the loan. The amount of coverage you need will depend on your situation. Yet, at the bare minimum, lenders need home cover in the amount needed to repair any structural damage or costs to replace the house in its entirety.

You can get a copy of your policy statement at least a few days before closing by calling the insurance company and asking them to fax it to your lender.

4. Closing of Disclosure

The Closing of Disclosure is a document from your lender that breaks down the terms of the loan and your closing costs. You should receive a copy of the closing statement three days before closing so that you can review the terms of the mortgage.

You will also need this document when you receive the cashier’s check or make the wire transfer as it will state the following: exactly amount that you have to bring with you on the closing day.

A man who, as a buyer, signs closing documents on his phone.
Source: (DocuSign/Unsplash)

Closing documents for buyers: the big ones

When you come to the closing table (with the primary documents in hand), there will be many, many documents and disclosures that you will need to sign, especially if you are getting a mortgage. That said, here are 11 primary closing documents everyone should expect to see.

5. Loan application

This is quite simple: you are going to view the original mortgage application and you sign it.

With this document, you confirm that you understand the terms of the loan and your financial responsibility to repay it.

6. Title Documents

The title document gives you a list of every previous owner and ensures that there are no liens or title claims on the property. If you bought property insurance, it would be here too.

“Property insurance ensures that there is no lien on the property. If someone puts a lien on the property on the day of closing and the title company has missed it, the buyer is “liable for those debts” if they don’t have property insurance, explains Szalay.

If there are any issues with the title rating, the title company will try to resolve them. There are some instances where the buyer’s broker works with the seller’s broker to get the seller to pay off its debts so that the purchase can go through. Sometimes, however, if the problems are big enough, whole deal can fail.

7. The mortgage or trust deed

The mortgage or trust deed is a document showing that your newly purchased home is the collateral for your mortgage loan. If you stop paying your mortgage, it can be repossessed and the lender will seize the house.

8. The Deed

If you are buying a house for the first time, you may think deed and a title are the same things – they are proof that you own the property. You are not completely wrong, but there is a difference.

A deed is a physical document that gives a description of the property and identifies the seller and the buyer. On the other hand, the title gives one the legal right to own and sell the property.

Note: You will receive an updated deed after closing once it is filed with the county.

9. Affidavit of Title

The seller issues an affidavit with the name an sworn title, who says they have the legal right to sell the property and that they have title to that property. It also shows that the seller swears that the facts about their property are correct – there are no liens on the property, there are no outstanding tax bills, and no other party is selling it.

10. Riders

AN rider is also known as an addendum, and it’s pretty standard to see riders in the sales contract.

Riders have additional terms added to the contract. The rider information expands or modifies some of the terms of the transaction. When looking at the riders, make sure there are no mistakes or items that you disagree with as the rider is an enforceable part of the contract.

A kitchen that was repaired and remodeled as described in the closing documents for the buyer.
Source: (Anastasia Krachkovskaya/Unsplash)

11. Buyer’s Repair Requests

The sales contract should include a home inspection emergency outlining the options that both the seller and buyer have regarding repairs. If the home inspection reveals significant problems with the home that require repair, the buyer may submit a repair request from the buyer and supplement to the contract.

The seller can agree or refuse to make the repairs, negotiate to lower the asking price so that the buyer can make the repairs themselves, or both parties can make other arrangements.

When concluding, you want to double check whether the seller fulfills (or will fulfill) the agreement as stated in an addendum.

12. Transfer tax declaration

The transfer tax return is a tax on the change of ownership in real estate. This tax is generally equal to a percentage of the sale price of the home.

The party responsible for paying this tax and referred to (some states call it a “stamp tax,” “excise” or by any other name) depends on the location of the property, but in most cases it is either the buyer or seller can agree to pay it (although not every state will require this tax). Who is responsible for paying the tax is usually part of the negotiation process before closing.

13. Escrow Disclosure

If your lender creates a “repossession” or “escrow” account to withhold a portion of your monthly payment to pay for your property taxes and homeowners insurance, you will typically be required to sign an escrow disclosure.

Escrow accounts are generally required for most loan types if you invest less than 20%. The escrow disclosure will split the annual fee into 12 monthly payments and at the end of the year the tax and insurance bills will be paid from the escrow account.

You usually don’t need to have an escrow account if you make a down payment of more than 20%, but if you don’t want to pay your homeowners’ insurance or taxes in one lump sum each year, you may want to ask about getting one set up for those costs.

Please note that you will receive a more detailed escrow disclosure statement after closing.

14. Proof of Occupancy

AN certificate of occupation (or CO) states that the home is safe to live in. This document is issued to homeowners of a new-build home, or if the home is used as rental or investment property.

The CO will explain what the property will be used for, whether the house is structurally sound, and whether it complies with all local building codes.

15. Sales Invoice

The sales invoice is a legal document that confirms that the property has been sold or transferred from one person to another. This legally binding document deals with the transaction details (if the seller will include or exclude items from the sale, the terms of the sale, and so on) and is used to protect the buyer or seller if there are any problems along the way.

A real estate agent meets with a buyer to discuss closing documents.
Source: (airfocus/Unsplash)

Remember closing documents for buyers

Here you are, about to get the keys to your new home and start a new chapter in life. But before you can start loading the moving van, you have to get through the closing day.

You are going to rate and sign a lot of documents, and while it may be overwhelming to think about the piles of papers you’ll be seeing and signing, remember this is the very last step!

Make sure you have all the required buyer closing documents ready, because you don’t want anything to cause a delay on your big (closing) day.

Header Image Source: (Laura Chouette/Unsplash)

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