How to Prepare for Closing Day: 4 Tips for California Home Buyers

California home buyers tend to have a lot of questions about the real estate closing process. This is especially true for first-time buyers who have never been through it before.

In a previous article, we outlined the basic steps in the process. In this guide, we will explore some of the things home buyers can do to prepare for closing day in California.

1. In California, closing represents the final step in the home buying process.
2. You’ll sign documents, pay your closing costs, and take ownership of the home.
3. Saving money in advance is one of the best ways to prepare for closing.
4. Try to keep your finances stable, avoiding new credit or large withdrawals.
5. Respond promptly to any additional paperwork or document requests.
6. Review your five-page Closing Disclosure, so you know exactly what to bring.

How to Prepare for Closing Day in California

In a home-buying context, the term “closing” refers to the final steps that complete the sale of the home.

It’s when all of the “loan docs” and other paperwork are finalized and signed by the home buyer. After that, homeownership officially transfers from the seller to the buyer.

Here are some things home buyers in California can do to prepare for the closing process, along with a few things to avoid.

1. Start saving money, the sooner the better.

It’s never too early to start saving up for your closing costs. This is one of the best ways to prepare.

In California, most home buyers usually end up accumulating various charges and fees that must be paid when they close. These are collectively referred to as closing costs, and they can add up to thousands of dollars.

In California, home buyers often end up with closing costs in excess of $15,000, and some as high as $40,000 (or even higher). This underscores the importance of planning and saving.

The good news? Most mortgage programs allow borrowers to use gift money from a third party, like a family member, for their closing costs and down payment.

2. Avoid major financial changes.

Many home buyers in California start off by getting pre-approved for a mortgage loan. Then they start house hunting, make an offer, and eventually go into “escrow.”

Throughout this process, it’s best to keep your financial situation as stable as possible. Pre-approval is helpful and highly recommended, but it’s not the same as the final approval that comes later.

It’s probably not the time to open new credit card accounts, or make a large bank withdrawal. These things could create additional paperwork and might even affect your mortgage qualification status.

The status quo is generally best at this stage — at least until you’ve successfully closed on your new home.

3. Handle any paperwork requests that arise.

During the loan review and underwriting stage, you might be asked for additional documents or information.

This is a fairly common occurrence in the days leading up to the closing, and it’s usually not a show-stopper. But it does require some action on your part.

For example, an underwriter might request a letter of explanation about a certain bank transaction, or other documents. Handling such requests promptly can help keep the closing process on track, which is what everyone wants.

Eventually, all of the necessary documents will be finalized and delivered to the escrow or title company that’s handling the closing. When this occurs, you’ll be ready to close.

4. Review your finalized list of costs.

California home buyers who use mortgage loans usually receive a finalized list of closing costs a few days before they are scheduled to close. It comes in the form of a standardized document, known as the “Closing Disclosure.”

Carefully reviewing this document will help you prepare for closing, and in several ways. For one thing, it shows the finalized amount of money you’ll need to bring to the closing.

The Closing Disclosure also breaks down the closing costs in an itemized fashion, so that you can see:

• What you’re paying for
• Who you are paying it to
• How much each item costs

This document will show loan-related fees, prepaid costs, escrow deposits, and other charges. The idea is to give you a complete, transparent picture of all the costs associated with the purchase — ahead of time.

A Glossary of Closing-Related Terms

If this is your first time buying a home in California, you might encounter some unfamiliar terms and concepts. Here are some terms you should know as you prepare for the closing process.

Closing: The final step in the home buying process. It’s when all the paperwork is signed, your closing costs are paid, and ownership of the home officially transfers from the seller to you. In California, the closing often takes place at a title or escrow company’s office.

Closing Costs: The various fees and charges you pay at closing—such as lender fees, title insurance, escrow fees, and prepaid items. In California, these costs commonly range from $10,000 to $40,000 depending on loan size and services.

Closing Disclosure (CD): A five‑page standardized form you receive at least three days before closing. It shows an itemized list of every fee, who’s getting paid, and the exact amount of cash you must bring.

Deed: The legal document that officially transfers ownership of the property. You’ll sign it at closing, and it will be recorded with the county where the home is located.

Earnest Money Deposit: A refundable deposit you submit with your offer to show you’re serious. It sits in escrow and applies toward your down payment or closing costs when you close.

Escrow: A neutral third party that holds documents and funds related to the home sale until all the conditions of the sale are met. The “escrow company” or “title company” facilitates the closing process. You “go into escrow” once your offer is accepted and your deposit and paperwork are in escrow.

Final approval: The lender’s green light after reviewing all documents (pay stubs, bank statements, explanations), usually issued just before closing.

Final Walk-Through: A final, quick inspection (usually 24–48 hours before closing) to confirm the property’s condition and any agreed-upon repairs, usually performed one or two days before the closing.

Interest Rate Lock: An agreement that “locks in” your mortgage rate for a set period (often 30–60 days) so that market fluctuations won’t raise your rate before closing.

Loan Documents (“Loan Docs”): The legal documents that you sign to finalize your mortgage and home buying process. It includes the promissory note and deed of trust.

Loan Estimate (LE): A standardized, three-page document that lenders must provide within three business days of receiving your mortgage application. It outlines key details of your loan offer, including the estimated interest rate, monthly payment, and total closing costs.

Pre‑approval: A lender’s initial estimate of how much you can borrow, based on your income and credit.

Prepaid Costs / Prepaids: Upfront payments for items like homeowners insurance, property taxes, and mortgage interest that cover the period from closing until your first mortgage payment.

Underwriting: The lender’s process of verifying your financial information and assessing risk. Underwriters may request extra paperwork, like a letter explaining a large bank deposit, before granting final approval.

Wire Instructions: Detailed directions from the escrow or title company showing exactly where to wire your funds (down payment and/or closing costs). Always verify via a live phone call to avoid wire‑fraud scams.