It probably feels like it’s been ages since you’ve started the homebuying process, and now that it’s time to sign on the dotted line, you’re thinking to yourself, “ I can’t wait to move into my new home! But… Do you get keys at closing? Am I even ready for this?”
In October 2019, Ellie Mae released a report showing closing on a house can take between 40 to 49 days (depending on the type of loan you have). This time frame is from the moment the offer is submitted to when you’ll receive the keys to your new home.
During the wait, buyers can feel overwhelmed because buying a house is a big milestone and a long-term commitment — especially considering the typical buyer lives in their home 12 to 15 years.
So, what’s the real deal about closing? What can you expect to take place on one of the most important days of your life? How many documents are you going to have to sign? More importantly, when will you be able to move in?
For answers to these questions and more, keep reading!
Do you get keys at closing? The short answer
Homeownership officially takes place on closing day. In order to get the keys to your new abode, all legal documents must be signed, payments must be made, and the deed must be recorded at the county recorder’s office.
Fortunately, closing day usually only takes a few hours, and if everything is wrapped up before 3 p.m. (and not on a Friday), you will get your new keys at closing.
Do you get keys at closing? The long answer
Buyers already know that closing day is a big deal, but few actually know what takes place before they get their keys. You’d be surprised by how many people are under the assumption that once they sign the mountain of paperwork, the deal is done and they can start moving in.
Wrong! There are quite a few things that have to happen before you can call the house yours.
On closing day, you are expected to bring the rest of the money that you owe to the table, or you won’t walk away with the keys. The money needs to cover the down payment and closing costs, and it can be in the form of a cashier’s check or wire transfer. “However, closing can be delayed if the bank didn’t wire the funds to the title company on time,” Claudia San Roman, a top real estate agent in Miami, explains.
Your down payment is the amount of money (usually calculated as a percentage of the home’s total purchase price) that you pay upfront on the house; it isn’t covered by your mortgage loan. The size of your down payment is going to depend on your financials and what kind of mortgage loan you have.
- If you qualify for a USDA or VA loan, you won’t have to put any money down (but you can).
- If you choose a FHA loan, your FICO score will determine how much you’ll need for a down payment (between 3.5% and 10%).
- If you have a conventional loan (like Fannie Mae or Freddie Mac), your down payment could be as low as 3% or as high as 20%, depending on your qualifications and financials.
It’s important to note that the money you paid after the seller accepted your offer is not the entire down payment — it is called an earnest money deposit, and it is made to show the seller that you are serious about following through and closing on the sale. If you back out of the deal, you will lose your earnest money.
The earnest money deposit can be as low as $500. However, in most cases it’s standard to offer 1% to 3% of the final purchase price as earnest money. If you’re interested in buying a high-priced home or if you’re buying in a competitive market, you might want to offer an earnest money number as high as 10% of the purchase price.
- Home appraisal
- Escrow fees
- Flood certification
- Property taxes
- Title and attorney fees
- Lender fees
2. Purchase contract
The purchase contract, also known as a real estate contract, is a stack of papers that outlines basic information about the deal, such as who’s buying and selling the house, the description and location of the property, the proposed closing date, and the purchase price. It will also detail the transaction’s finer points, such as the condition of the home and what fixtures or appliances are included with the sale.
While the buyer must understand the purchase contract in full, it’s strongly advised to pay special attention to any addendums or contingencies added in. These addendums and contingencies can modify the contract in a few ways.
A common contingency is a financing contingency which states what kind of loan the buyer is trying to get. If the buyer can’t get the loan they applied for, this contingency will let the buyer back out of the contract, penalty-free.
Another contingency could let the buyer back out of the contract if the home inspection uncovers major problems with the home. If the buyer wants the home, they do have the option of asking the seller to lower the price or credit in lieu of repairs.
The appraisal contingency is required for most mortgage loans to ensure the house is worth at least the amount of money that you are borrowing to buy it. If the appraiser thinks the house is worth less than the purchase price, you can renegotiate with the seller or back out of the contract without losing your earnest money.
There are also some instances where the buyer will add a contingency that they will only go through with this transaction if they are able to sell their current home.
3. Other documents
On the day of closing, be prepared to sign a lot of documents! Some of these documents will have to be notarized and recorded with the city or county recorder. Fortunately, the closing attorney or the title agent will send the documents (either online or in person) to the city or county recorder, and then the house is officially yours.
Let’s take a look at the documents that you’ll be signing.
The deed is a physical document that transfers the property title from the seller to the buyer. When the new deed is made in the buyer’s name, it is recorded with the city. Keep in mind that since it is recorded with the city, it will be made public that you officially and legally own the property.
There are a few different types of property deeds but the three most common are called a general warranty deed, grant deed, and a quitclaim deed. The general warranty deed and grant deed have some provisions in place that’ll protect you as the buyer. Upon signing the deed, the seller is basically indicating that the house is clear of title defects, liens, and other problems with the title.
Much like a background check for employment, a title review is done for the buyer’s benefit, and mortgage lenders often will require a title review, too. The title company or real estate attorney investigates the title to ensure that there aren’t any liens on the house, missing heirs, or other issues. If the search turns up any problems or defects, that could delay closing.
Mortgage or deed of trust
A mortgage, sometimes called a deed of trust, is an agreement between the buyer and mortgage lender that says the lender has interest in the property. Should the buyer default on the loan, this document states that the lender has the right to put the property up for foreclosure.
So, when do you get keys at closing?
Closing day is going to be hectic, and you’re going to be a bundle of nerves. That is completely understandable because this is a monumental moment in your life! Of course you want to make sure everything goes smoothly and everything is as it should be in order for the transaction to be completed.
When you’re reviewing the contract, make sure you take note of when the deed and mortgage will be recorded. If the closing is finalized before 3 p.m. and it’s not a Friday, you’re likely to get the keys that very day. (That is, if there isn’t a contingency in place that allows the seller some extra time to vacate the home.)
Not only do you want to make sure you pay attention to the contract and have the necessary funds with you, you are going to want to be mindful of the final walkthrough.
“I had an instance where my client actually cancelled the contract after the final walkthrough and realized the house had been broken into. They were able to get out of that contract because the property was not in the same condition it was in when they made the offer,” San Roman shares.
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