The activity called 'Closing' is the final step in which the home is transferred to you if you are purchasing. If you're refinancing, closing signifies the transfer of debt from the old lender to the new one. Once your loan is approved by the Underwriting Department a closing date is set. Depending on the laws of your state, the closing may be conducted by either:

• Your lender
• A title insurance or escrow company
• Your real estate broker
• An attorney who represents either you or the seller

The purpose of the closing is to make sure the property is ready to be transferred to you from the seller. To ensure that the transfer can be made, the lender normally prepares the following items ahead of time:

1. Title search and report. Land records, court records and other legal documents are checked to determine if the seller has a clear, marketable title (i.e. no one else has a claim on the property) to transfer to you.

2. Title insurance binder. Once the title search is complete, this document assures the lender that title to the property qualifies for a title insurance policy.

3. Title insurance. Title insurance protects both you and your lender against losses that may be incurred because of a defect in the title, a forgery, a recording error, claims of undisclosed or unknown spouses or heirs, and other risks that did not appear in the public records when the title search was done.

4. Survey. Confirms the property boundaries are as described in the purchase and sale agreement. A land survey is not required in all states.

5. Termite, well, sewer or septic certificate. Certifies that the sewage and water supply work properly and that the property is free of termites and/or other wood destroying insects. The sales contract will state whether you or the seller is responsible for these inspections and certificates.

6. Hazard insurance. Hazard insurance (also referred to as a "homeowner's policy") protects you and your lender from loss in the event the home is damaged or destroyed by fire, storm or other hazards. You are responsible for obtaining hazard insurance prior to closing and for providing proof of insurance to your lender. The lender may also require additional insurance against loss by flood or earthquake.

Several other documents must be prepared by the lender before the closing:

• HUD 1 settlement statement. An itemized list of the credits and charges, for both you and the seller, based on the contract terms. See HUD-1, Explained for more details.
• Loan documents. Final loan documents that grant your lender a lien against the property in order to secure the repayment of your loan. These documents include a promissory note, which is your legal promise to repay the loan; and a deed of trust/mortgage, the instrument that is recorded in the public records.
• The Deed. Transfers ownership of the property to you. The deed must contain a legal and accurate description of the property and a list of the owners (if there are more than one). See Vesting Options for details on different ways you might want to hold title.

It is a good idea to ask to review all your settlement statement a day before you sign it. Also consider asking your attorney to review it. You will sign many documents at the closing meeting, including:

• Settlement statement
• Note
• Deed of trust/mortgage

You will be required to pay any remaining down payment and closing costs. For amounts over $500, a certified or cashier's check rather than a personal check is usually required. When all the necessary documents and releases are recorded at the county clerk's office, you will receive the keys to your new home!

• Explore the rest of the Loan Process
• Explore Credit Score Topics
• Learn about Loan Types
• Determine if you want to be pre-qualified or pre-approved
• Learn about the Tax Advantages of Home Ownership
• Submit A Loan Application