Title Insurance
With few exceptions, a home represents the largest single investment most people make in their lifetimes. Thus it is only natural that an owner will want to make that investment secure by protecting the basic proof of ownership. Title insurance is the most effective and lowest cost way of doing just that.
When a person buys a car or consumer goods, they seldom need to know whether the former owner is married, single or divorced: whether they have paid their taxes or are involved in a lawsuit. But when a person buys a home it is necessary to have all that information and much more. For while he may own the property, others such as lenders and lienholders, may also have rights in that same real estate.
Title Insurance is a contract to protect an owner against losses arising through defects in the title to real estate owned. If the title is insurable, the company guarantees the owner against loss due to any defect in title or expenses in legal defense of the title pursuant to the terms of the policy.
The cost of title insurance is directly related to the value of the property. The premium is small compared to the total purchase price. It is paid only once and remains in force for as long as the property is owned by the insured and continues to protect the insured on warranties after it is sold.
The Closing Process
Whether you're purchasing your first home or your fifth, the day of closing should be a time of celebration. While you're busy packing, ordering phone service and scheduling movers, it's comforting to know that skilled professionals are busy working behind the scenes to make sure your closing runs smoothly.
Your first look at the settlement process may be on the day of closing, but the process itself begins much earlier. Come along for a look behind the scenes at the settlement process in action!
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 purchase agreement or escrow agreement is received, the title company will review it for completeness and accuracy. If an earnest money or deposit check is received, the title company 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 title company does, upon receipt of an order is to begin preliminary title work. The title company searches and examines the title and tax records. The title company often reviews court judgments, death certificates or divorce decrees to determine if it is necessary to record any document in the land records. A title commitment or other form of title evidence is now prepared. The legal description is verified for accuracy. The commitment is forwarded to the real estate agency, lender, attorney and buyer or seller, if specified.
Upon receipt of the title commitment, the parties to the transaction check 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.
The title company then contacts an Attorney to order documents necessary to convey title to the buyer. Transfer affidavits, homestead affidavits & rescission affidavits are prepared by the title company. 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 title company will order payoff figures from the existing lender. Often, a request to close equity line will be prepared by the Title Company and signed by seller. 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 inspections are typical of what's happening behind the scenes at this point in the settlement process.
The title company / 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 have been compared, edited and complied with, the title company 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 should have provided you with a Good Faith Estimate of your loan costs.
As closing day approaches, the title company 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 thus resulting in a smooth closing process. The title is updated the morning of closing and 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!