The Closing Process.
When purchasing a home, there are many processes that must be completed to ensure that, at closing, all of the steps necessary to finalize the purchase and sale of the property are completed, and completed correctly. Of course, the last thing you want, whether you are a buyer, a seller, a lender, or a real estate agent, is to worry about a problem with the closing. Our job is to ensure that all of the behind-the-scenes processes are completed so that your closing is timely, correct, and stress free.
The behind-the-scenes work begins as soon as the contract for the sale and purchase of the property is accepted by the parties, which can be anywhere from 30 days to three months before the closing. Here’s how the settlement process typically works.
If you are working with a real estate agent, he or she may place an order with a “settlement agent” as soon as the contract is accepted and signed by the parties. Most homebuyers rely on their real estate agent to select a settlement agent. However, homebuyers can choose their own settlement agent, and it is always the homebuyer's final decision as to which settlement agent will handle their closing. Often, if the real estate agent does not select a settlement agent, the lender will use someone with whom they work regularly - someone they know to be professional, reliable, and efficient.
The settlement agent will oversee the closing process and make sure everything happens in the right order and on time, without unnecessary delays or expenses.
First, the settlement agent will work with your real estate agent and/or lender to ensure that the contract contains all of the necessary terms to effect a lawful conveyance of the property being purchased.
Next the preliminary title work is done. The settlement agent conducts an exhaustive search of the public records to make sure there are no issues with the title, such as liens against the property, judgments, unreleased deeds of trust, past due taxes, etc. Most of the time, if a problem is discovered during the title exam, the settlement agent will take care of it without you even knowing about it. After the title is cleared, they can provide title insurance.
There are two kinds of title insurance coverage—a Loan Policy, which covers the lender for the amount of the mortgage loan, and an Owner’s Policy, which covers the homebuyer for the amount of the purchase price. If you are obtaining a loan, the lender will require that you purchase a Loan Policy. However, it only protects the lender. We always recommend you obtain an Owner’s Policy to protect your investment. The cost of an Owner's Policy is typically less than $500.00, based upon the purchase price of the property, and it protects your family's largest investment - your home.
Once the preliminary title work is complete, the settlement agent will issue a title commitment and, if there is a lender involved, the settlement agent will forward the title commitment to the lender for review and approval. Meanwhile, the settlement agent is simultaneously coordinating other important details. 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. Other tasks typically include collecting property inspections, surveys, and termite reports.
Any problems or discrepancies discovered by the settlement agent are reported to the appropriate parties so that they can be corrected. The settlement agent’s role is to facilitate cooperation, coordination, and compliance between all of the involved parties - buyer, seller, real estate agents, and lender.
If you are obtaining a loan, your lender has three days from the time of the loan application to provide you with a Loan Estimate of your loan costs. Keep in mind this is just an estimate. The final costs will be outlined on the Closing Disclosure, prepared by your lender, and ALTA Settlement Statement, prepared by your settlement agent. The Closing Disclosure will be provided to you by your Lender at least three days prior to your closing date. Items shown on a typical Closing Disclosure and Settlement Statement include costs paid at closing, like the purchase price of the property and most of the "closing costs" that are associated with the process, as well as pre-paid and other items such as your earnest money deposit, property tax prorations, and HOA dues.
As closing day approaches, the settlement agent orders any updated information that may be required, including loan fees, deed recording fees, etc. 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.
On closing day, all of the behind-the-scenes work is done. While you’ve been busy packing and coordinating the movers, the closing process has been happening behind the scenes so that your new home is ready for you to move in. At closing, all of the necessary paperwork will be executed to convey the property from the seller to the buyer, and any loan documents are executed to obtain the financing necessary to purchase the property.
The behind-the-scenes work begins as soon as the contract for the sale and purchase of the property is accepted by the parties, which can be anywhere from 30 days to three months before the closing. Here’s how the settlement process typically works.
If you are working with a real estate agent, he or she may place an order with a “settlement agent” as soon as the contract is accepted and signed by the parties. Most homebuyers rely on their real estate agent to select a settlement agent. However, homebuyers can choose their own settlement agent, and it is always the homebuyer's final decision as to which settlement agent will handle their closing. Often, if the real estate agent does not select a settlement agent, the lender will use someone with whom they work regularly - someone they know to be professional, reliable, and efficient.
The settlement agent will oversee the closing process and make sure everything happens in the right order and on time, without unnecessary delays or expenses.
First, the settlement agent will work with your real estate agent and/or lender to ensure that the contract contains all of the necessary terms to effect a lawful conveyance of the property being purchased.
Next the preliminary title work is done. The settlement agent conducts an exhaustive search of the public records to make sure there are no issues with the title, such as liens against the property, judgments, unreleased deeds of trust, past due taxes, etc. Most of the time, if a problem is discovered during the title exam, the settlement agent will take care of it without you even knowing about it. After the title is cleared, they can provide title insurance.
There are two kinds of title insurance coverage—a Loan Policy, which covers the lender for the amount of the mortgage loan, and an Owner’s Policy, which covers the homebuyer for the amount of the purchase price. If you are obtaining a loan, the lender will require that you purchase a Loan Policy. However, it only protects the lender. We always recommend you obtain an Owner’s Policy to protect your investment. The cost of an Owner's Policy is typically less than $500.00, based upon the purchase price of the property, and it protects your family's largest investment - your home.
Once the preliminary title work is complete, the settlement agent will issue a title commitment and, if there is a lender involved, the settlement agent will forward the title commitment to the lender for review and approval. Meanwhile, the settlement agent is simultaneously coordinating other important details. 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. Other tasks typically include collecting property inspections, surveys, and termite reports.
Any problems or discrepancies discovered by the settlement agent are reported to the appropriate parties so that they can be corrected. The settlement agent’s role is to facilitate cooperation, coordination, and compliance between all of the involved parties - buyer, seller, real estate agents, and lender.
If you are obtaining a loan, your lender has three days from the time of the loan application to provide you with a Loan Estimate of your loan costs. Keep in mind this is just an estimate. The final costs will be outlined on the Closing Disclosure, prepared by your lender, and ALTA Settlement Statement, prepared by your settlement agent. The Closing Disclosure will be provided to you by your Lender at least three days prior to your closing date. Items shown on a typical Closing Disclosure and Settlement Statement include costs paid at closing, like the purchase price of the property and most of the "closing costs" that are associated with the process, as well as pre-paid and other items such as your earnest money deposit, property tax prorations, and HOA dues.
As closing day approaches, the settlement agent orders any updated information that may be required, including loan fees, deed recording fees, etc. 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.
On closing day, all of the behind-the-scenes work is done. While you’ve been busy packing and coordinating the movers, the closing process has been happening behind the scenes so that your new home is ready for you to move in. At closing, all of the necessary paperwork will be executed to convey the property from the seller to the buyer, and any loan documents are executed to obtain the financing necessary to purchase the property.