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The process of closing on a house

The closing is the official end of the house-buying and selling process, when the buyer and seller fulfill all conditions of the purchase and sale agreement. It generally involves signing a lot of documents, mostly by the buyer, and usually takes place at the title company, attorney’s office, or one of the real estate agents’ offices.

In many states, the seller isn’t required to attend the closing and can sign all paperwork ahead of time. Sellers should check with their real estate agent or attorney to find out if they need to attend the closing.

Key milestones of the closing include:1
  • Transferring of ownership and possession of the property to the buyer 
  • Paying off all loans the seller's still carrying on the house 
  • Paying real estate agents, lawyers, and others who contributed the sale
  • Receiving proceeds from the sale 
  • Fulfilling all agreed-upon contingencies of the sale

Home buyers: What to expect at closing and how much does it cost?

  • A settlement agent oversees the closing process, usually in a title company’s or an attorney’s office. A few days before the closing, your lender will send you the Closing Disclosure and the Loan Estimate. Look for the “cash to close” reference, this tells you how much money you’ll need to bring to the closing, often in the form of a cashier’s check or a bank wire.

    Cash to close includes the buyer’s portion of the closing costs, which vary by location but average 3% to 4% of the home’s price,2 plus any remaining down payment owed by the buyer.

    The fees and costs associated with home-buying, including:2 
  • Title search 
  • Title insurance 
  • Loan origination 
  • Private mortgage insurance 
  • Property taxes 
 
If you’re buying a home with cash and not taking a loan, the closing process should move more quickly without loan paperwork to sign. You’ll still have to pay closing costs—just not the ones associated with a mortgage.
 
Whether you pay cash or take a loan, in addition to having money to close, you’ll also need some identification, such as a driver’s license or passport.

How much are closing costs for sellers?

Before calculating your profit on the house, be sure to account for all closing costs. In addition to commissions for real estate agents, you’ll pay an assortment of fees, taxes, and other costs associated with your home sale. While closing costs can vary by location, sellers generally pay anywhere from 1% to 3% of the sales price.2

Some of the costs sellers can typically expect to pay at closing include:3 

  • Real estate commissions. Usually 6% of the home’s sale price, split between the seller’s and buyer’s agent 
  • Mortgage payoff and prepayment penalty. The amount you owe on your mortgage, plus any potential penalties for paying off your loan early 
  • Transfer taxes or recording fees. Your state or local government will charge for transferring the title from you to the buyer 
  • Title insurance. This protects against any issues with the title transfer in a real estate deal 
  • Prorated property costs. Includes any property taxes and homeowner’s association dues 
  • Attorney or settlement fees. Paid to the escrow or title agent handling your closing
For an estimate of total costs you can expect at your closing, talk to your attorney or real estate agent. A few days before the closing, you’ll also receive a Closing Disclosure document outlining all closing costs in detail. Keep in mind, your final cost amount may not be available until the day of the closing.

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1. "Home Sellers: What to Expect at Closing," Nolo, June 22, 2022, https://www.nolo.com/legal-encyclopedia/home-sellers-what-expect-closing.html. 2. Judy Dutton, "How Much Are Closing Costs? Plus: How to Reduce Closing Costs," realtor.com®, March 14, 2023, https://www.realtor.com/advice/buy/reduce-closing-costs. 3. Michele Lerner, "Closing Costs for Sellers: Common Fees Associated With Selling Your Home," realtor.com®, August 7, 2022, https://www.realtor.com/advice/sell/sellers-must-pay-closing-costs-too/.

This information is general in nature and provided for educational purposes only.

Fidelity does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.

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