Once an order is received, the countdown to closing
begins. Timing is essential, to make sure all the ingredients for a
successful closing are in place for your arrival. When the contract or
escrow agreement is received, the settlement agent will review it for
completeness and accuracy. If an earnest money or deposit check is received,
the settlement agent will see that it is promptly deposited into an escrow
account, where the funds will remain until the time of closing.
One of the first things the settlement agent does,
upon receipt of an order is to request preliminary title work. The title
company searches and examines the title and prepares a title commitment or
other form of title evidence. This is then forwarded to the settlement
agent.
Upon receipt of the title commitment, the settlement
agent checks the information for completeness and accuracy and makes note of
any requirements which must be satisfied. The agent compares the commitment
to other documents, such as the contract and loan closing instructions,
making sure all information is consistent.
While the title evidence is being prepared, the
settlement agent is busy coordinating other matters. If the contract calls
for a prior mortgage to be paid off, the agent will order payoff figures
from the existing lender. If the buyer is assuming the loan, an assumption
package will be ordered showing the current status of the loan.
While each closing is as unique as the people
attending it, much of the behind-the-scenes work leading up to the closing
is fairly commonplace for the skilled professionals performing it. Ordering
property inspections, surveys and termite reports are typical of what’s
happening behind the scenes at this point in the settlement process.
The settlement agent brings any problems or
discrepancies which may be discovered to the attention of the appropriate
parties so that they can be corrected. It is his or her job to facilitate
cooperation, coordination and compliance between all settlement service
professionals involved with the transaction. Everyone working together helps
make the closing a cause for celebration!
Once the preliminary work is complete and all
information on the contract, loan closing documents and title commitment has
been compared and complied with, the settlement agent is ready to prepare
the HUD-1 Settlement Statement.
All costs must be shown on the HUD-1. This includes
costs paid at closing as well as pre-paid costs, such as earnest money
deposit or loan application fee. If you are a buyer and are obtaining a loan
to purchase residential property, your lender has three days from the time
of the loan application to provide you with a Good Faith Estimate of your
loan costs. Within those three days you should also receive a copy of the
HUD-1 Booklet, “Buying Your Home,” which outlines the settlement process.
As closing day approaches, the settlement agent
orders any updated information which might be required. Once the settlement
agent is satisfied that the paperwork is in order, he or she confirms the
date, time and location of the closing with all the parties involved.
The closing is where it all happens. Everything done
behind-the-scenes leads up to this day. It’s time to close the transaction
and transfer ownership of the property from the seller to the buyer. If that
buyer is you, welcome to your new home!
Understanding closing costs is important, as a rule
of thumb, closing costs amount to approximately 11 percent of the total
sales price of a home. They usually include a real estate commission, loan
fee, escrow charge, title insurance premium, a pest inspection and the like.
The title insurance premium usually amounts to less
than 1 percent of the purchase price of your home, and less than 10 percent
of your total closing costs. So, although the title company or escrow office
usually serves as a meeting ground for closing the sale, only a small
percentage of total closing fees are actually for title insurance
protection. Title or escrow company personnel will review and explain your
closing statement when you prepare to close your transaction and take
ownership of your new home.