Closing Procedures (Detailed)
Closing Procedures technically begin after contingencies have been removed and, if financing is involved, after you’ve received final approval (aka Clear-to-Close or CTC). Here’s what to expect:
Step 1: Acknowledge Closing Disclosure
Your initial Closing Disclosure showing final loan terms, payment amount, and all closing costs. Federal law requires you receive this at least three business days before signing loan docs.
Step 2: Balancing
While you're reviewing the Closing Disclosure, I’m working with escrow or title is working behind the scenes to "balance" the transaction. We verify all of our numbers match, calculate prorations for taxes and HOA fees based on the target closing date, and ensure every dollar is accounted for. Nothing moves forward until the numbers balance to the penny.
*Importantly, Escrow/Title holds the master sheet. If other docs/estimates don’t match escrow’s closing stmt, it’s them that must reconcile with the master sheet. Consequently, if you see something on the CD that doesn’t match what I or the escrow officer has said it’d be (e.g.., insurance already paid in full, etc), you can trust the latter is more accurate and the CD will be revised.
Step X: Final Docs to Escrow
After everyone’s numbers match, the lender & I will put together the full loan doc package and send the large PDF to the escrow officer. They, in turn, print it all out, combine it with a few other docs necessary for closing, and prep the whole package for signatures.
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Step X: Scheduling the Signing
Once the closing package is prepped, escrow or title reaches out to you to schedule your signing. In most cases, they'll coordinate a mobile notary to meet you at your home, office, or another convenient location. The notary is assigned by the title company and brings all these documents to you.
Step X: Signing the Loan Documents
You meet with the mobile notary (or visit the title office) to sign all loan paperwork. This includes the promissory note, deed of trust, settlement statement, and various disclosures. The notary verifies your identity, witnesses your signatures, and notarizes the required documents.
Step 5: Returning Original Documents
After signing, the original documents must get back to escrow or title. Mobile notaries typically use overnight shipping via FedEx or UPS to ensure next-day delivery. These originals are scanned and uploaded for initial review, then physically shipped to meet the lender's cut-off time. Most carriers require the package be dropped by 4 PM for next-day delivery.
Step 6: Buyer Wires Funds
Generally, fter signing (or sometimes before), you wire your down payment and closing costs to escrow. This should happen the day before or morning of closing to account for bank processing times. Most banks have wire cut-off times between 4:00 PM and 4:30 PM local time. Wires initiated before cut-off typically process within a few hours; wires sent after cut-off won't process until the next business day.
Step 7: Prior-to-Funding Conditions
Once escrow receives the original signed documents, they forward them to the lender. The lender verifies all "prior-to-funding" conditions are satisfied. These are final requirements like updated pay stubs, proof of insurance, or final employment verification. The lender won't release funds until these conditions are cleared.
Step 8: Lender Releases Funds
After confirming all conditions are met and original documents are received, the lender wires the loan funds to escrow. This wire must arrive before the bank's daily cut-off time (typically 4:00-5:00 PM). Domestic wires generally arrive within hours if sent before cut-off.
Step 9: Recording the Deed
With all funds in escrow's account, the title department submits the deed and mortgage to the county recorder's office for official recording. Recording makes the transfer of ownership public record. This step varies significantly by state.
Attorney vs. Escrow States: Some states require attorneys to handle closings (like Connecticut, Delaware, Georgia, Massachusetts, New York, South Carolina, Vermont, West Virginia), while others allow title or escrow companies. Texas, California, Arizona, and many western states use escrow companies; eastern states often use attorneys.
Recording Timing: Some counties offer same-day recording if documents are submitted early enough. Others may take 1-2 business days. Recording cut-off times vary by county but are typically between 3:00-4:00 PM.
Special Recording: In urgent situations, some counties offer "special recording" service for an additional fee, which prioritizes your documents for same-day processing. This isn't available everywhere and requires coordination with the recorder's office.
Step 10: Wet vs. Dry Funding
Wet Funding States (most states): Funds are disbursed at closing or within 1-2 days of signing. You get your keys as soon as recording is complete, often the same day you sign. Wet states include Alabama, Arkansas, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, West Virginia, Wisconsin, and Wyoming.
Dry Funding States (nine states): There's a mandatory waiting period of 1-4 days between signing and fund disbursement. Documents undergo final review and must be recorded before funds are released. You won't receive keys until recording is complete and confirmed. Dry states are Alaska, Arizona, California, Hawaii, Idaho, Nevada, New Mexico, Oregon, and Washington.
Critical Timing Considerations
Wire Cut-Off Times: Banks typically stop processing wires between 4:00-5:00 PM local time. Missing cut-off delays closing by a full business day.
Recording Cut-Offs: County recorders have their own cut-off times, often 3:00-4:00 PM. Documents submitted after cut-off won't record until the next business day.
Weekends and Holidays: Banks and county offices don't process transactions on weekends or federal holidays. Closings scheduled late Friday may not record until Monday.
Overnight Shipping Cut-Offs: Carriers need packages by 4:00 PM for next-day delivery. Late drop-offs add an extra day to the timeline.
What Not to Do
Don't make any financial changes after clear to close. Avoid taking on new debt, making large purchases, opening credit accounts, or changing jobs. Lenders perform final verifications right before funding, and any changes can delay or cancel closing.
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