Settlement Day

Can it be? Is settlement day finally here? Did we actually make it? See how easy it was!

The Day:

At this point you have in hand or have arranged for:

A Cashier’s Check to bring with you or a wire transfer set up.
Homeowner’s Insurance in place for your new home and cancelled for your old.
Utilities set up for your new home and cancelled for your old
Just finished the walkthrough or are on your way.
Packing complete and moving truck loaded (if you’re moving today.)

The package from your lender will probably have arrived at the Title Company the day before settlement and all the information entered into the settlement sheet (HUD-1) according to the lender’s instructions. The HUD-1 is then sent to the lender for review and approval.

Your agent will have reviewed the HUD-1 and talked to the title company about any changes that need to be made, communicated with the listing agent about anything that may have turned up during the walkthrough, and talked with you about the HUD-1.

At the Table:

Usually, the buyers and sellers and their agents, along with the attorney or settlement officer will all be seated around the table. The first thing that will happen is the review of the HUD-1, the settlement sheet. This is the financial record of the transaction and will include all the money paid on behalf of the buyers, and all the money taken out of the sellers’ proceeds in order to get to the bottom line for all parties. The settlement officer will be explaining each of the documents as you sign them. If you would like to examine any of these documents at length, please let us know; settlement typically takes less than an hour, which doesn’t allow time for you to read every single word of every document.

Title Search and Title Insurance:

The attorney or company conducting settlement will have searched the county land records for your property, preparing the Deed of Title and will be issuing title insurance on the property. It is often possible to obtain a re-issue of the sellers’ Title Insurance policy which can often save several hundred dollars on the cost of your coverage. Your agent will have looked into this and made arrangements for the re-issue if it can be done.

Once the Title Search has been done and no problems found, the title company will prepare a Commitment or Binder for the issuance of a Lender’s Title Insurance Policy. This policy protects against defects in the chain of title and must be purchased by you to protect the lender. Most buyers also elect to purchase an Owner’s Title Insurance Policy for themselves. An Owner’s Title Insurance Policy is your best protection against potential title defects, which can remain hidden despite the most thorough search of public records and the most careful closing. For a one-time premium, the title insurance company agrees to reimburse you for loss due to defects existing prior to the issue date of your policy, up to the policy amount. And, should it be needed, the policy also provides for the cost of legal defense of your title. The standard coverage policy insures:

Your ownership of the property
That you have physical access to the property
That you are aware of any covenants, restrictions, easements, rights of way, liens and encumbrances which affect the property; and
That you have marketable title to the property.

Types of Ownership:

The actual Title to your new home is your proof of ownership. That ownership can come in several different forms:

Tenants by the Entirety – can only be used by a married couple.
Tenants in Common – two or more co-owners, not necessarily with equal shares in a property.
Joint Tenants – is similar to Tenants by the Entirety but typically used by non-married owners.

For a more complete explanation of types of ownership as well as the entire settlement process, check www.VillageSettlements.com.

Settlement Documents:

Many of the documents you will be signing at settlement will be associated with your loan, are prepared by your lender and sent to the Title Company. Other documents will include your title to the property, the note, and the penalties for not paying on time. There will also be documents required by law that are associated with the various taxes that will be collected, documents for the IRS, and in many cases, the same handwritten documents you signed when you applied for the loan, only now they’ve been typed.

After settlement, the Title company will record your title and mortgage, pay out any money they are holding in escrow, pay the taxes that have been collected, pay the final water bill, and once the actual Title comes back from the county, will be forwarding it to you. It can take several months for the county to record your title so don’t think you’ve been forgotten if you don’t receive your title quickly.