Learn how to explain and review closing documents with your first-time buyers, and what to prepare and expect at the closing appointment.

In NY the attorneys do the closing. Brokers are not closing agents. Thus…Competent real estate attorneys who represent the buyers/borrowers should be familiar with the loan documents and should explain the documents to borrowers as part of the closing and signing process.

How do you teach first-time buyers about closing documents?

Buying your first home is an exciting and rewarding experience, but it also involves a lot of paperwork and legal formalities. One of the most important steps in the process is closing, when you finalize the deal and get the keys to your new property. However, closing documents can be confusing and overwhelming for first-time buyers, especially if they don't know what to expect or what to look for. That's why it's essential to teach them about closing documents and how to review them carefully before signing anything. Here are some tips on how to do that.

1 Explain the purpose and types of closing documents

The first thing to do is to explain to your first-time buyers what closing documents are and why they are necessary. Closing documents are the legal contracts and disclosures that confirm the terms and conditions of the sale, the transfer of ownership, the settlement of costs, and the rights and responsibilities of both parties. They also include any required documents by the lender, the title company, the escrow agent, and the local or state authorities. Some of the most common closing documents are the closing disclosure, the promissory note, the deed of trust, the title insurance policy, and the certificate of occupancy.

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Lance Margolin

Partner Emeritus at Margolin,Weinreb & Nierer LLP
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In NY the attorneys do the closing. Brokers are not closing agents. Thus…Competent real estate attorneys who represent the buyers/borrowers should be familiar with the loan documents and should explain the documents to borrowers as part of the closing and signing process.

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Cindy Compton

Corporate Training Specialist at Westcor Land Title Insurance Company
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Closing documents should mirror the terms that the buyer and seller agreed to in the real estate contract; include documents needed by the title company to convey clear title; and have a separate loan package from the lender that must be signed for the new loan to disburse

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2 Review the closing disclosure in advance

The closing disclosure is one of the most important closing documents, as it summarizes the final loan terms, the closing costs, and the cash to close. It also compares the estimated costs from the loan estimate with the actual costs at closing, and explains any changes or discrepancies. Your first-time buyers should receive the closing disclosure at least three business days before closing, and you should review it with them in detail. Make sure they understand the interest rate, the monthly payment, the loan amount, the escrow account, the fees and charges, and the seller credits. Also, check for any errors or inconsistencies, and ask the lender to correct them before closing.

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Cindy Compton

Corporate Training Specialist at Westcor Land Title Insurance Company
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When you applied for your loan, your lender should have given you a Loan Estimate. Compare the loan estimate to the closing disclosure and reach out to your lender for any fees that are higher than originally disclosed. You can also ask your lender or the title company closer to review all of the charges on the closing disclosure/settlement statement.

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3 Prepare a list of questions and documents to bring

Another way to teach your first-time buyers about closing documents is to prepare a list of questions and documents to bring to the closing appointment. The questions should cover any clarifications or concerns they may have about the closing documents, such as the escrow instructions, the title commitment, the property taxes, or the warranties. The documents should include their identification, their proof of funds, their homeowners insurance policy, and their copy of the contract. You should also remind them to bring a cashier's check or a wire transfer confirmation for the amount due at closing.

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Cindy Compton

Corporate Training Specialist at Westcor Land Title Insurance Company
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Some buyers prefer to ask the questions prior to the closing appointment, allowing time for errors or inconsistencies to be corrected. Review your government-issued, picture ID when you sign the contract to ensure it won't be expired by the closing appointment.

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4 Walk them through the signing process

Finally, you should walk your first-time buyers through the signing process and make sure they feel comfortable and confident. You should explain to them who will be present at the closing, how long it will take, what documents they will sign, and what they will receive. You should also encourage them to read each document carefully, ask questions if they don't understand something, and verify their personal information and loan details. You should also reassure them that you will be there to support them and guide them throughout the process.

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Cindy Compton

Corporate Training Specialist at Westcor Land Title Insurance Company
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Remind buyers that some documents, such as the mortgage/deed of trust, promissory note, vesting deed, etc., are standardized documents and cannot be altered without lender approval.

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5 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Cindy Compton

Corporate Training Specialist at Westcor Land Title Insurance Company
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Buyers need to exercise caution when wiring funds for closing to avoid being a victim of wire fraud. Always call the title company/closing attorney (using the phone number on the title commitment/binder) to verbally verify wiring instructions before sending any money. Do not use revised, emailed wiring instructions sent at the last minute; title companies shouldn't change wiring instructions in the middle of your transaction. Once the wire is initiated, call your closer to share your wire amount and the wiring instructions used so they can watch for your funds. Ask them to call you when the wire posts to their bank so you'll know the funds are there for closing. Be extra cautious and protect your money!

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How do you teach first-time buyers about closing documents?

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1 Explain the purpose and types of closing documents

2 Review the closing disclosure in advance

3 Prepare a list of questions and documents to bring

4 Walk them through the signing process

5 Here’s what else to consider

Working with First-Time Home Buyers

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