HOME: FIND. BUY. PROTECT. The Third Leg.

It’s National Homeownership Month and our goal is to help educate and prepare future home buyers for the home buying process.  In our last two posts, we’ve discussed how buying a home can be like standing on a stool.  It takes a lot of balance, and to keep from falling, you’ll need all three legs of the stool working together to hold you up.

In today’s blog, we’ll focus on the third leg of the stool, the title agent, who helps protect the home you purchase.  Your title agent will work to provide you with peace of mind during your home buying process, reduce your risk, and help protect your property rights by examining and verifying legal documents associated with the property you are purchasing.  As you can imagine, this is a complex process, but it’s very important because it ensures the title can be legally transferred to you, so you can be confident that once you purchase the property, you will be the rightful owner.

To ensure the title is valid, there will be a thorough examination of property records, known as a title search.  During the title search, your title agent searches public and private records looking for previous liens, tax issues, unpaid child support, ownership disputes, forgery or fraud and other possible issues that might impact ownership.  As you can imagine, this is no “Google Search.”  The title company may require a survey to determine the boundaries of the property, whether the home on the property sits within those boundaries, whether there are any encroachments on the property by neighbors or any easements that may impact an ownership claim.

Once it has been verified that the title to the property you are purchasing is valid, your title agent will offer you an owner’s title insurance policy to help protect your property rights.  Title insurance protects the lender and/or owner against lawsuits or claims against the property that result from disputes over the title.  Your mortgage lender will purchase a separate “lender’s policy” to protect their financial interest in your property, BUT only an “owner’s policy” protects YOUR interests in the property.  Owner’s title insurance has a one-time fee, and protects you for as long as you or your heirs own the property.  The cost of title insurance depends on the size of the loan and varies greatly from state to state.

The party involved in completing a transaction between a buyer and seller is known as the settlement agent.  Often times, your title agent will also be your settlement agent; therefore, you may meet with or speak with this agent, or their office, on multiple occasions.  At closing, your settlement agent will bring all the necessary documentation related to the closing, explain it to both parties prior to signing, collect closing costs and distribute monies.  You should feel free to contact your title/settlement agent at any time to get answers to your questions on title searches, title insurance, or closings.  Finally, your settlement agent will ensure that the new titles, deeds and other associated documents are filed with the appropriate entities.

From contract to closing, your Realtor®, lender and title agent work together to make this exciting experience as simple and painless as possible.  Buying a home is likely the biggest financial (not to mention, emotional) decision of your entire life, and having a good support system to help keep you balanced is what you need, and deserve.   Rahmati Law Firm is a Vetted and Verified Stewart® Trusted Provider™ and our attorneys stand ready to assist you with all of your real estate closing needs. If you would like to speak with our real estate team about scheduling a closing with our firm, please fill out the short form below, or you may contact our real estate team anytime by calling 256.533.2002.

To learn more about what it takes to be a Stewart® Trusted Provider™, please visit http://www.stewart.com/agency-services/stewart-trusted-providers.

“No representation is made that the quality of legal services to be performed is greater than the quality of legal services performed by other lawyers.”

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Understanding Closing Costs

What are Closing Costs?

Closing costs refer to the costs associated with purchasing, selling, or refinancing real estate. According to InvestorWords.com, Closing Costs are defined as “fees and expenses, over and above the price of the property, incurred by the buyer and/or the seller in the property ownership transfer.”  Examples include:  loan origination fee, points, appraisal fee, title search and insurance, survey, taxes, deed recording fee, credit report charge and other costs. Closing costs are also known as settlement costs, and are typically 2% – 6% of the mortgage amount.

Closing costs are a large expense associated with purchasing any real estate and are paid at closing.  The closing is the final step in executing a real estate transaction and when the ownership of a piece of real estate is transferred to the new owner. In real estate sales, who pays what is often dictated by local custom. In a mortgage refinance, costs may be paid by the lender or borrower.

Your closing costs should not be a surprise at the closing table.  As required by TILA-RESPA, these costs are disclosed to the Purchaser by the lender on the Loan Estimate during the loan application process, as well as to the Purchaser and Seller on the Closing Disclosures prior to closing.

What You Really Need to Know

Closing costs can spoil the Purchaser’s excitement at closing if they don’t have a clear understanding of what the closing costs are or why they’re required to pay them. When a Purchaser understands what the individual fees are and knows why each of them are necessary, closing can again become an exciting event. Below is a breakdown of the costs paid by the Purchaser, the Seller and those costs that are typically shared.  Keep in mind that any of the Purchaser’s costs are negotiable, and can be paid by the Seller if the Purchaser and Seller both agree to it.  This agreement must be in writing.

A good resource for understanding each of these costs can be found at the following link:  http://www.goodmortgage.com/Learn/Basics/Closing_Costs.html.

PURCHASER COSTS
Loan Closing Costs: Pre-Paid Items:
Origination Fee Interest to the beginning of the next month
Appraisal Fee Up-front mortgage insurance
Credit Report VA funding fee
Final Inspection Fee USDA Rural Development fee
Processing Fee Escrows:
Tax Service Fee Hazard Insurance
Flood Certification Mortgage Insurance
Discount Points Property Taxes
Title Charges: Recording Charges:
Settlement Fee Recording fees for deed and mortgage
Title Search Fee Deed Tax
Express Fees Mortgage Tax
Courier Fees Recording and handling fees
Wire Fees Miscellaneous Fees:
Termite Letter
Transfer Fees
Follow-up Inspection Fee
SELLER COSTS
Real Estate Commissions
Deed Preparation Fee
Express Fee
Courier fee for pay-off of existing mortgage
Record of Release
“Corrections” required according to the termite letter
Tax Proration
Costs of curing defects in the title
SPLIT COSTS
Title Binder
Title Insurance Premium
Simultaneous Issue Fee

“No representation is made that the quality of legal services to be performed is greater than the quality of legal services performed by other lawyers.”