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What is a mortgage "closing?" What happens at the closing?

The “closing” is the last step in buying and financing a home. The "closing,” also called “settlement,” is when you and all the other parties in a mortgage loan transaction sign the necessary documents.

After signing these documents, you become responsible for the mortgage loan. Familiarize yourself with some of the key documents you will be signing so that you know what to look for when you get them.

If you’re purchasing a home with a loan, the closing of your loan (the time when your loan becomes final and the funds are distributed) and the closing of your home purchase (when you become owner of your new home) typically happen at the same time. Once the closing is complete, you are legally required to repay the mortgage.

Your closing may include some or all of these entities:

  • Your real estate agent or realtor
  • Your title insurance company
  • An escrow company
  • Your attorney (if you come from a state where attorneys conduct closings, or if you hire legal representation for your closing)
  • The seller’s attorney
  • Your lender may or may not attend

Depending on what state you live in, all the parties may sit around a table and sign all the documents at once. Or the closing could take several weeks as the signatures of each party are collected separately. Some companies allow you to electronically sign documents, either in advance of closing or at the closing table. A closing may even be conducted by mail or even on the internet.

Regardless of who performs the closing or where it occurs, there will be many important documents that you’ll need to sign that will have lasting financial implications on your life. 

Tip: Before you sign, make sure you carefully read and understand all the loan documents. Don’t sign the loan documents if the loan is different from what you expected. Don’t sign the documents if you can’t make the payments, if you find any errors, or if you do not understand the loan terms.

Be sure to understand how your payments may change over time. With an adjustable-rate mortgage, your payments may increase over time, and it is important to understand when the payment can change and by how much. Even with a fixed-rate mortgage, your total monthly payment may change due to changes in your taxes or insurance.  

Next step

Learn more about the key steps in the closing process.