What is a Closing Date?

Closing Date Definition

The closing date represents the day ownership of a home transfers from the seller to the buyer and is stated and agreed to by all parties on the sale contract. The buyer will select a solicitor who, prior to the closing date, will acquires the necessary documentation, register the mortgage and title change with land titles and will meet with the buyer to review and sign the purchase and mortgage financing documentation. On the closing date, the buyer's solicitor will obtain the mortgage funds from the mortgage lender and make them available to the seller’s solicitor along with the buyers down payment funds. One the funds have been dispersed to the seller’s solicitor, the go ahead will be given to the seller or the seller’s Realtor to release the keys of the property to the buyer. This is usually required to happen by noon on the agreed closing date.

In regards to the closing date for a mortgage refinance or renewal, it refers to the date the new mortgage replaces the previous one.

Prior to the Closing Date

The buyer's solicitor will make an appointment with the buyer to review and sign the purchase and mortgage financing documents with the buyer. The seller’s solicitor will also make an appointment with them to review and sign the sale and land transfer documents.

A settlement sheet that provides a detailed itemized description of all the services rendered along with the associated charges is provided at this same appointment and it is at this time that the home buyer is required to provide a certified cheque or money order for the remaining down payment funds and legal fees to the lawyer. Home buyers are also required to provide their solicitor with a binder letter from their insurance company demonstrating that Homeowner insurance will be in place on the closing date.

Once the buyer’s lawyer has disbursed the funds on the closing date and the land-title transfer has been confirmed, the buyer becomes the legal owner of the property.

In reference to a mortgage refinance, a similar set of documents are signed with a solicitor or a lender approved legal service and on the closing date, the new mortgage’s terms take effect. If any funds have been withdrawn from the equity of the home via the refinance, they are now provided to the borrower in the form of a cheque and issued by the Solicitor.

Significance of the Closing Date

With respect to a home buyer, the date specified for closing carries no particular financial advantage. Lenders determine loan interest per diem from the day of closing until the first payment date of the mortgage, which typically occurs around the first of the month. A closing date is usually determined simply on the basis of convenience for both the seller and buyer. However, closing dates may provide those refinancing or renewing their mortgage with a certain advantage as no penalties for breaking a mortgage are charged on the date the original mortgage term concludes. Completing a refinance prior to this date may cost the borrower many thousands of dollars in penalties that could have been avoided by matching the *closing date *of the refinance with the renewal date of the current mortgage.

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Last updated Jan 14, 2019