How to get ready for closing when buying a home

Closing on a home is the final step in your homebuying journey, and it’s where all the details come together. From reviewing your closing disclosure to making sure funds are ready, understanding the process can save you time, stress and money.

By the time you reach closing, all your major questions about the property, your loan and the terms of the sale should be resolved. This is the point where negotiations are finalized, your mortgage is approved and you’re ready to become the legal owner of your new home.

Closing is the final step in the homebuying process, where ownership of the property is officially transferred from seller to buyer. This process involves signing all necessary documents, paying closing costs and receiving the keys to your new home.

As part of this process, you'll encounter closing costs — the final fees and expenses required to transfer ownership of a home. These fees are necessary to seal the deal and are paid by either the buyer or seller at settlement. By law, lenders must provide an estimate of these expenses after your mortgage application is approved and before you move forward with the purchase. It’s essential to note that these fees are not always final and may change prior to closing. Most closings take about 30 to 60 days after your offer is accepted.

Pro tip: “Start preparing your closing-cost funds early, don’t just budget for the down payment,” Raman Muralidharan, Citizens' Bank head of mortgage, told Homes.com.

Start by creating a checklist of all required documents and their submission deadlines. Track each item as you send it to your lender and confirm receipt to avoid delays. Staying organized ensures you can quickly provide any last-minute forms.

Common closing documents include:

• Closing disclosures: Summarizes your loan terms and costs.  

• Seller’s disclosures: Lists any known property defects that could affect your decision.  

• Title documents: To check for liens and confirm the title is clear, your title company or real estate attorney will conduct a title search. They review public records to ensure there are no outstanding claims or legal issues with the property. You’ll receive a title report before closing; review it carefully and ask your agent or attorney to explain anything you don’t understand.

• Loan application: A copy of your original application for reference.  

“Getting paperwork and funds ready well before closing reduces the risk of last-minute financing delays,” said Muralidharan.

Double-check your application for accuracy and update your lender on any changes, such as a new job or additional debt, that could impact your loan terms.

The seller’s disclosure can reveal issues with the property, including water damage, foundation issues, infestations, lead paint and malfunctioning systems. Read carefully and investigate any concerns. If you find red flags, ask for more details or get an inspection. You may be able to negotiate repairs or a price reduction. Not all states require seller disclosures, so check with your agent.

Your lender must send the closing disclosure at least three business days before closing. It outlines details about your loan, including loan term, amount and interest rate, estimated monthly mortgage payment, closing costs, which include origination, underwriting, government fees, cash to close and loan disclosures.

Review this document carefully — go through the numbers yourself and review them with your lender and real estate agent. In states where you are required to be represented by legal counsel, your attorney will help but always review for mistakes.

Always “review your loan estimate and closing disclosure closely to catch any errors or unexpected fees,” Muralidharan said.

At this point in the closing process, the inspection report is reviewed in detail. If significant issues are discovered, the parties may negotiate repairs or other concessions, such as a price reduction or assistance with closing costs.

Because most offers are contingent on the results of the home inspection, the contract can be canceled if an agreement on repairs or concessions cannot be reached.

Most lenders require you to have a homeowner's insurance for your new property and you’ll need to show proof of coverage before closing on a home. Take time to compare different policies and coverage levels to find one that suits your needs and budget.

Insurance cost depend on:

• The condition and features of the home 
• The amount of coverage you select 
• The deductible you’re comfortable with  

Your closing disclosure will tell you exactly how much money you’ll need to bring on closing day. Here’s a breakdown of the different costs and payments that might be involved; some are your responsibility, while others may be covered by the lender or the seller.

• Closing costs: These typically range from 2% to 5% of the home's price or the loan amount. For example, on a $400,000 home, closing costs could be $8,000 to $20,000. These amounts can vary based on location, lender and negotiation. It can include charges for the appraisal, loan origination, title insurance and applications. 

• Earnest money: A deposit that shows you’re serious about buying the home. It’s held in escrow and applied to your down payment or closing costs once the sale is finalized. 

• Lender credits: Your lender may offer credits to help with closing costs, often in exchange for a higher interest rate, which could mean higher payments over time. 

• Cash to close: The total amount you’ll need at closing, including your down payment and closing costs. Some government-backed loans may let you put less money down. 

• Dry closing: This occurs when all documents are signed, but funds are not immediately disbursed. This can happen if there are last-minute issues with paperwork or funding. Ownership is not officially transferred until the funds are released.

• Seller concessions: Sometimes the seller agrees to pay part or all of your closing costs, which can reduce your out-of-pocket expenses. 

• Lender programs: Many lenders offer special programs or credits that can help cover closing costs that might include lender-paid closing cost assistance, grants or credits. Ask your lender about available programs to see if you qualify for additional savings. 

Most buyers lock in their mortgage rate after their loan is approved and before closing. This protects you from rate increases while your loan is processed. The lock period usually lasts 30 to 60 days — long enough to cover the time until closing. Some lenders offer a one-time “float-down” option if rates drop, but be sure to ask your loan officer about the terms.

"Lenders can’t predict the markets, but they can offer a look at how rates are moving. They can help discuss the pros and cons of locking in rates to offer protection from spikes and risks of an approach based on current Fed signals, inflation reports and market trends,” Muralidharan said.

“There are some lock-in features that can assist borrowers in making alternative choices, such as a rate lock with a one-time float-down option. However, these come with certain terms that the loan officer would disclose for that feature,” he added.

Ahead of closing day, arrange payment for your down payment and closing costs. This is usually done by certified or cashier’s check, or wire transfer. Double-check all details — recipient information and the total amount — to avoid mistakes or fraud. Always confirm instructions directly with your title company or lender and make these arrangements early to prevent last-minute issues.

“Be skeptical of unexpected calls or emails about your closing: Never give your information over the phone without verifying the party you are speaking to,” said Muralidharan.

On closing day, you’ll review and sign documents and need to bring a few essentials:

• Government-issued photo ID (driver’s license, passport, etc.) 

• Certified or cashier’s check for closing costs or proof of wire transfer (personal checks and cash aren’t accepted) 

• Your Closing Disclosure for reference 

• Proof of homeowners insurance 

• Contact list for your agent and attorney 

Before signing, make a final walk-through of the property to ensure its condition matches your agreement and that any repairs have been completed. If you spot any issues, raise them with your agent right away; you may need to negotiate with the seller before closing. This last step helps ensure everything is in order before you take ownership.

More on this topic:

• Understanding closing costs: What to expect and how to prepare
• Home inspection: How it can save buyers thousands