The keys, please? When you buy a new home, getting the keys is the little act that symbolizes the entire enormous transaction. You found a house, made an offer, got approved by a lender, arranged home inspections, got the appraisal and closed the deal. After all that, getting the keys to the kingdom is a little like getting carried over the threshold.
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As a buyer, you're likely to feel that you cannot get the keys too soon. However, you may have to wait until the loan is funded and closing is finished before having the fun of unlocking that door as a new homeowner.
Typically, buyers receive the keys to their new home on closing day, though there are a few exceptions.
Closing In on the End
Homebuying is a marathon, not a sprint. This is especially true for first-time buyers who are experiencing the adrenaline and the paperwork for the very first time. From the first tentative discussion with a real estate agent to the final closing appointment, there are many crucial steps in the process.
As the closing day approaches, homebuyers know that the end is in sight. The tricky steps are completed, from improving your credit score to getting a mortgage loan. So, closing shouldn't be a problem, right?
Usually closing doesn't derail the real estate purchase, but it's not just signing on the dotted line either. There are many parts to the closing process, and most if not all of them have to happen before the seller's agent hands over the keys.
Steps in Closing the Deal
Closing day is when ownership of a house is transferred from the seller to the buyer. Most of the time, the closing procedure only takes a few hours, but there are many items that have to be crossed off the list before the buyer is handed the keys.
States regulate the closing process, and requirements can vary. However, the same general requirements apply. The parties must do a final walk-through and sign the legal documents. Then, money must be distributed and the deed to the property recorded. When these things are completed, the homebuyers get the keys — unless they contracted to receive them earlier or later.
Buyer's Closing Inspection
As a first-time homebuyer, you have doubtless looked over the house you are buying more than once, but don't use that as an excuse to skip the closing inspection. The purpose of this walk-through is not to make sure you still like the property but to confirm that everything looks like it did when you last inspected it.
If the home has been damaged in some way, you need to know it now. During the inspection, be sure all repairs the seller contracted to make were completed, that no new issues have appeared and that any appliances and furnishings included in the purchase agreement remain on the premises.
Final Legal Documents
As a buyer, you want to get the closing over with quickly, but the closing papers are the final contracts that will impact your life for years to come. Read every page before you sign it and consult with your real estate agent or attorney if you don't understand what something means.
The closing documents you need to sign will include:
The deed that transfers ownership interest in the property
The title review prepared by the title company issuing title insurance and the real estate attorney disclosing any problems with or defects in the title
The mortgage/deed of trust that sets out the agreement between the buyer and mortgage lender giving the lender a security interest in the property
The bill of sale
The settlement or closing statement
While you've already negotiated the terms of your loan and the sale, take the time to review them. Confirm that the interest rate and other loan terms are accurately reflected. You will have received a good faith estimate of your closing costs early in the homebuying process, so compare the actual closing costs to this list. You should not hesitate to have your agent or lawyer dispute unexpected or erroneous fees.
Distribution of Money
First and foremost, the transaction by which you acquire your new home is a sale — a real estate sale. Like in most sales, money has to change hands for ownership to change hands. Most of the money is provided by the mortgage lender, which means that the closing won't happen until the day of funding. That happens when all of the lender's conditions are met, and the lender wires the loan proceeds to the escrow account.
Generally, the lender and the title or escrow company are in contact before closing. All documents required to close the loan are submitted and approved by the closing date, and the funding amount is confirmed. That allows the lender to set up the wire transfer early and ensure timely disbursement.
The buyer's earnest money goes into escrow too, and the buyer must bring the remainder of the down payment money and cash for the closing costs. Usually, this is by cashiers' check or wire transfer. The funds are then distributed by the escrow agent or real estate attorney in charge of escrow according to the lender's instructions.
Recording the Deed
Recording a deed is a critical step and is usually the final one before the buyer gets the keys. Recording means filing the deed with the recording office in the appropriate county or local government. When this happens, the buyer is the official owner of the home.
In most states, recording happens on the day of funding, which means the buyer gets the keys the same day. Occasionally, state or local rules mandate that the deed be recorded a day or so after the mortgage is funded. A buyer will not be able to get the keys or move in until recording happens.
So, When Do You Actually Get the Keys?
Despite all of these considerations, most buyers get the keys to their new house on closing day. There are a few exceptions. First, if closing is scheduled for late in the afternoon, such as after 3:00 p.m., it is possible that the funding won't happen during business hours. That means that the seller doesn't receive the money (or give you the keys) until the next business day. The cutoff time might be even earlier on a Friday afternoon.
It is also possible for a seller and a buyer to agree to a different key-exchange date. For example, a buyer might negotiate to get possession of the home early in exchange for waiving some contingencies or additional earnest money. The seller might require a rent-back period where the seller continues to occupy the premises for a set period of time after the sale.
When it is time to deliver the keys, how is that done? You may expect the blaring of trumpets and popping champagne corks, but it's usually a very casual process. The listing agent hands them off to the buyer or the agent in a convenient location, even sometimes at a coffee shop. Then, reality sinks in that the house is yours, and it's time to get those locks changed!
- HomeLight: Do You Get Keys at Closing? A Homebuyer’s Guide to Closing Day
- The Mortgage Reports: When I Buy a Home, When Can I Move In? How Do I Get My Keys?
- Zillow: 5 Things to Do Before and After Closing
- Real Estate Law Blog: When Does the Buyer Get the Keys After Closing on a House?
- The Mortgage Reports: Home Closing: What Happens on the Day of Funding?
- HomeLight: When Do You Get to Cash In the Big Fat Check After Closing?