The home closing process explained
Congratulations! You found the perfect home, you negotiated a great mortgage deal and a great price on the home. The last step before you get the keys is the home closing process. Aim to be an informed buyer; by this day you should have already read the mortgage agreement the home’s purchase agreement and the closing costs you will have to pay; remember that all those payments will amount to the largest investment most people make their lives, so take the time to read all the documents before the closing day.
There are three main events that will happen on the closing day will be:
- The Loan events
- The legal events
- The title transfer events
1. Loan Events:
It’s very possible the lender will reach out to your employer the day of closing or a few days before the day of closing to confirm you still work there, so make sure you don’t change jobs in between the escrow period.
Your lender will also check again your credit report to make sure there are no big changes.
At this point, you have reviewed already your mortgage documents and know exactly how much the loan is for and what your payments are going to be, but on the day of closing your lawyer will review this with you before you sign. Also, the lender will require you to have home insurance. You will need to get home insurance and have the policy faxed to your lawyer.
- The Legal events:
Remember the role of a buyer lawyer is to look for legal problems with the property that may prevent the transaction from going through. The role of the seller lawyer is to solve those problems. One of the key things the buyer lawyer does is check the title, and government records to ensure there are no liens or any judgments registered against the property, and if there are, those need to be cleared by the seller before the transaction can close. For example, let’s say someone sued the seller in the past and they never paid; if a judgment was registered against the property, that’s going to show up.
Title Insurance: In many cases, title insurance is optional, but it is a good idea to get title insurance. For example: let’s say you bought a house without a survey (buyers are allowed to buy properties without a survey).
Later, your neighbor discovers your garage is built past the property line and into their property. Your neighbor would have the right to ask you to take down the part that encroaches on their property. Well with title insurance, you are protected for this. They will either buy the land from your neighbor or find another way to remedy the situation, but you are protected.
Land Survey: The land survey is an optional document, but it would give you a clear representation of where your property line begins and where it will end.
Property taxes & utilities: Your Lawyer will make sure the seller has paid up all costs up to the day of closing.
- Title Transfer & Deed Transfer events
For the title and the deed to be transferred, the seller will authorize their lawyer to start the process, once the funds have been received by the seller’s lawyer, they will release the title and the deed, and your lawyer will register you as the new legal owner.
All three events need to happen for the transaction to close, the loan events, the legal events, and the title events. The lawyer or closing agent will perform all the work previous to the closing day, and once it is all ready, they will ask you to come to sign the papers, which typically happens on the closing day.
Tip for a successful closing day
Aim to be an informed buyer; this means 1-3 days prior to closing, you’ll want to review the documents you will need to sign; there should be no surprises. Remember this will be one of the biggest investments in your life, so take the time to request and read all the documents, which includes:
The closing statement
This will detail all the closing costs, including your down payment. Make sure you understand all the costs and have a draft cheque ready to provide to the lawyer.
Here is where you state you will use the home only for the purposes you have declared. For example, if it is a property you will live in and not rent out, the affidavit
The mortgage document
You might need to sign the mortgage document at the lawyer’s office. Speak with the lawyer to find out so you can review those documents ahead of time.
The bill of sale and the deed
You will also sign the bill of sale and the deed, but these will only be signed once the lender has forwarded the funds to the lawyer, and you have paid the closing fees. After the funds have gone to your lawyer’s trust account, they will distribute the funds including paying the seller. At that point, the transaction is clear and you will be registered with the land registry office as the new owner of the property.
When Do I Get My Keys?
You will receive the keys once you are registered with the land registry office as the new owner. The registration in most cases takes place via the internet, so it is a fast process that can be done in a few minutes after the seller lawyer has confirmed they have received the funds to pay the seller. Once the seller signs off on the transfer and you are registered the house is yours.