In real estate, closing refers to the finalization of a transaction with all requirements met and documents endorsed.
Some of the key events that take place include:
- Official transfer of property ownership
- Disbursement of funds
- Execution of all relevant and required documentation
Because the closing date is the day when all the terms of a transaction is set in stone, a lot of expenses will pop up in the form of closing costs.
The closing date is also of particular interest to a bank as it triggers them to charge what is called a per diem interest on the borrower.
This is basically a pro-rated interest charge for the use of funds before the official first full period of mortgage repayment commences.
If closing date is getting near and the home loan is not ready, bankers can usually push a borrower’s approved loan application through the underwriting process to quickly generate the needed offer letter for closing to take place.
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