Closing

Financial Dictionary -> Mortgages -> Closing

Closing or "closing on the deal / transaction" is a term used in real estate and the housing market for the last part of the transaction (or buying selling process). After the buyer formally agrees that they want to purchase the property, a closing date when the transaction will go ahead is made, (usually a good few weeks after). On the day of closing the paper work and contracts are signed and the ownership is transferred in to the buyer's name. This includes the buyer's bank paying the agreed amount of money to the seller's bank , the signing of the deed to the house, the registration of the deed and several other possible registration processes. This can all be done in the presence of a lawyer.

It is a common practice for the buyer and seller to conduct the closing process under what is known as escrow. This simply means both parties are protected by a middleman and the transaction doesn't go forward without the predetermined criteria being met. This usually includes the deed and money being held in "escrow" while certain things go ahead. If something goes wrong then the deed and money goes back to the original owners.

Setting the closing date needs to be a well thought out decision and you shouldn't just agree with whatever the seller advices at the time. You need to make sure you are available, that you don't have work commitments, you have adequate accommodation (if you sold your old home) and you have the money ready for the transaction at the time. It is also a very good idea to have your mortgage in sync with the closing date.

Although closing can be a very stressful time, communication makes it easier. Do not dwell or hesitate on things, or string the buyer or seller along. It is important to discuss any problems right away and it is better to reschedule a closing date rather than waiting for the day and pulling out.