What happens on closing day when co-buying a home
Your co-buy group is preapproved for mortgages, you’ve agreed on the perfect property, and your offer is accepted. You’re so close to closing on the property that you can smell the champagne. 🍾
But before popping any champagne bottles, you’ll want to know what is involved on closing day. In this guide, we’ll help prepare you for what is involved in the closing process, what to expect on closing day, and what your group needs to bring on the big day.
What is a closing and when does it happen?
When you co-buy a home, the last step in the process is called the closing. The closing date is when you finalize all the details of the transaction and, finally, your group becomes legal owners of the home. It’s time to seal the deal!
The closing will typically happen 4-6 weeks after your group signs the sales and purchase contract, though it could take longer. This allows enough time for home inspections, home appraisals, funding and title searches to take place.
The closing day itself may take several hours as your group completes its final paperwork.
Who attends the closing?
In some areas of the country, the buyer and seller sit down together at closing. In other areas, you won’t even see the seller, as you’ll have separate appointments.
The closing agent is usually a title officer, escrow company officer or an attorney. It will be a neutral third party that has the expertise to ensure everything is completed correctly. Your co-buy group and the seller will agree on the closing officer as part of the offer on the home.
Here is who is typically present on closing day:
What should we bring to our co-buy home closing?
Most of what you’ll need on closing day will be provided to you, but there are a few items you’ll need to bring with you. Here’s a quick rundown of what to include on your checklist:
- Photo identification – You’ll need a government-issued identification, such as a driver’s license or passport, so the title company can verify your identity
- Proof of homeowners insurance – Before your lender will approve you for a mortgage loan, they’ll require you to take out a homeowners insurance policy. You can use the policy’s declarations page as proof of insurance.
- Cashier’s or certified check – You’ll need to pay for closing costs, the down payment, prepaid interest, property taxes and insurance during the closing. This is also known as your group’s cash to close, or the total amount your group will need to bring to close your mortgage loan.
- Your Closing Disclosure – The Closing Disclosure form lists the final terms and costs of your mortgage loan. This shows the loan amount, interest rate and monthly payment, including a breakdown of how much of your payment is made up of principal, interest, private mortgage insurance (if applicable), property taxes and homeowners insurance. It will also spell out the amount you’ll need to bring on closing day.
How much should our group save for closing costs?
Closing costs typically make up to 3-6% of the cost of the property. Closing costs are separate from, and in addition to, your down payment. Closing costs cover things like the appraisal, title insurance, application fees and more.
Depending on the market you’re buying a home in, you may be able to negotiate for the seller to pay for a part of all of your closing costs. Bear in mind this typically only happens in a buyer’s market. If you’re in a red-hot housing market (like right now) and the seller receives multiple offers, asking the seller to cover closing costs may result in losing the bid.
Getting to closing day was undoubtedly a bit stressful at times, and your hand may be a bit sore from signing piles of paper. But you did it! It’s time to enjoy the exciting day – the day you and your friends officially cobought a home.
Now, at last, it’s time to pop those bottles of champagne. Congratulations! 🥂
Nestment, Inc. does not guarantee and is in no way responsible for the accuracy of information provided in this blog post. All information is provided “AS IS” and with all faults. Data presented here may not reflect all real estate activity in the market. While the information on this site is about legal and tax issues, it is not intended as legal or tax advice or as a substitute for the particularized advice of your own attorney and tax professional.