You just bought a new Illinois home and life is good, not to mention exciting. The seller agreed to your purchase offer and you found a mortgage lender. Now the only thing standing between you and move-in day is the closing. If this is your first home purchase, that closing may be causing you some worry. What will happen there?
As Home Buying Institute explains, you really have nothing to worry about. The real estate closing is simply the final step of your home buying journey. This is where and when legal title to your new home passes to you from the seller.
Step by step
As the buyer, you will sign many legal documents when you close. In addition, a number of transactions will take place, including the following:
- You give your escrow agent a cashier’s check, the amount of which pays your closing costs.
- Your mortgage company provides your escrow agent with a check for your mortgage loan, assuming this transaction has not already taken place.
- Your escrow agent gives the seller a check for whatever amount of the purchase price (s)he is entitled to.
- The seller then signs the deed that gives you legal title to your home. If you have yet to receive a set of keys to it, (s)he will give them to you now.
- Your title company representative takes possession of the deed so that (s)he can properly register it with the Recorder of Deeds, who will then mail it back to you.
That’s it! You now are the proud owner of your new home.
In all likelihood, around 30 days have elapsed since you made your purchase offer. This has been your escrow period, and a lot of people did a lot of things for you during it. While you may not know exactly who did what, you owe costs and fees for this work. Those are your closing costs. As a general rule of thumb, your closing costs will run about 3 percent of the amount of your mortgage loan.
Your mortgage lender gave you a Good Faith Estimate of those costs about three days after you applied for your loan. (S)he then gave or will give you a HUD-1 Settlement Statement a few days leading up to your closing date. This statement includes a full list of each of your actual closing costs. Their total is the amount of your closing costs that you will pay your escrow agent via certified check at your closing.
While this information is not legal advice, it can help you understand real estate closings and what to expect.