The Buying Process
Finding a Home
Making an Offer
Finding a Loan
The Right Price
Getting to Settlement
Historic Real Estate
1st Time Homebuyers
Foreclosures & Short Sales
Getting to Settlement
A lot will be happening during the period between the time you enter into a contract on a house and sit down at the settlement table, much of it behind the scenes and not involving any active participation on your part. After the intensity of finding the house, negotiating the contract, getting through any inspections, and scrambling to find the documents for your loan application, you may find yourselves with time on your hands. Once you have reached this point, if you haven’t yet done the following, do it now:
- Make sure your Homeowners Insurance is at least in process. Also, make sure that your insurance agent has run the CLUE Report to check for previous claims on the property, and will be able to issue insurance.
- Arrange for movers or a rental truck.
- Make sure your loan officer or the processor has everything they have asked for in order to continue with your loan.
- If there is a definite settlement date, go ahead and change the utilities, phone and cable into your name effective the day of settlement (or of possession if there is a Post-Settlement Occupancy Agreement). The settlement company will normally take care of the water and sewer bill and the Homeowners Association. We’ll email you a list of utilities, phone numbers and emails.
- If your loan officer or the processor needs any further information from you, get it to them as soon as possible. Everything must be processed quickly in order to meet the loan commitment deadline.
- If you are buying in an area that has a Homeowners’ or Condo Association, you will get a copy of all the HOA documents so that you can review them and make sure there are no restrictions you’re not okay with.
- Your loan officer or processor will order the appraisal, which typically takes a week or two.
- Once the appraisal, employment verifications, mortgage and credit information is gathered, it will all be sent to Underwriting for final written approval by the date for loan commitment in the Contract.
- The lender’s settlement department will be in close communication with the settlement company and will be sending them all the monetary information about the terms of your loan.
The Settlement (Title) Company
- The settlement company’s job is to pull everything together that goes into the transfer of a property and to make sure that the transfer is done in accordance with the law and the lender’s instruction. The settlement company is primarily representing the transaction rather than any of the Parties. In this area, buyers and seller do not typically bring their own attorneys to settlement, although you are certainly free to do so and to have your own attorney review the contract.
- In this area, settlements are frequently conducted by settlement officers working in association with an attorney, although we usually have settlement conducted by an attorney.
- The settlement company will be searching the title through Land Records for the last 40 years to make sure there are no liens against the property or problems with the chain of title.
- They will also be ordering the survey or location drawing. A location drawing may be sufficient for a permit for a fence or deck but not for an addition. [Check this with the local permitting office.] The price for a location drawing for a ¼ acre lot is around $200, while a full survey on the same lot could run as much as $1,000.00. You’ll be sent a form by the settlement company to order this.
- The settlement company will also be preparing the title insurance binder and 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 purchase a policy to protect your interest in the property.
- They will be ordering the final water reading and transferring that account and the Homeowners Association membership into your name.
- Perhaps the most important procedure by the settlement company is to prepare the settlement sheet, known as the HUD-1. This is the monetary record of the transaction and should contain all the charges and credits to you and the sellers, any fees due, such as property and transfer taxes, as well as the commission, fees connected with the mortgage, and any adjustments between buyers and sellers. The HUD-1 must be approved by the lender prior to settlement and will also be sent to the agents to check.
- At this point in the process, your agent will have sent the contract to the lender and to the settlement company, as well as making sure that they have everything they need.
- The termite inspection will be ordered, the report reviewed and communicated to the listing agent, to the lender, and to you.
- The listing agent will be ordering the well and septic tests (unless you have elected to do the full septic inspection) if necessary, and will send those results to your agent, who will send them to the lender and to you.
- Your agent will be following up on any repairs that need to be done as a result of the inspections. There may occasionally be further financial adjustments as the results come in.
- You’ll be given all information as soon as available. We’ll be sending our checklist every week or so to keep you in the loop as tests are ordered and results come in. Call if you have questions!
- Sometime within five days of settlement, we’ll be doing what is called a walkthrough, just to make sure that the house is still in the condition it was in when the contract was written, that everything is working properly, and that any repairs have been completed. This will typically take about an hour and will consist of running all the appliances and checking the entire property, including plumbing, lights, HVAC, etc.
- Occasionally it will happen that we find something wrong such as a minor plumbing leak that developed after the inspection. These things are worked out to everyone’s satisfaction before settlement, or the money for the repair is held out of the seller’s proceeds until such time as the repair has been made.
Just Before Settlement
There may not be a final amount available from the settlement company until immediately before settlement, but you’ll need to get a certified or cashier’s check for the funds to close. You can use the most recent Good Faith Estimate from your loan officer (we’ll get you an updated one) to get the bank check (made out to the Title Company or to you) and then simply bring a personal check to settlement. There will not be much difference in the amount and it will probably be in your favor, in which case you’ll get a check at the table for that difference. If there is to be a gift of funds from a relative, check with your loan officer for instructions. At this point,
DO NOT MOVE ANY MONEY AROUND, RECEIVE ANY UNAUTHORIZED FUNDS, OR MAKE ANY DEPOSITS OR WITHDRAWALS, OPEN NEW CHARGE ACCOUNTS, SPEND LARGE SUMS OF MONEY OR TAKE OUT ANY LOANS WITHOUT CHECKING WITH YOUR LOAN OFFICER.
Bring to settlement:
- Photo ID such as driver’s license
- Another ID such as a credit card
- A copy of your insurance policy
- Your certified or cashier’s check for the amount you need to bring made out to the Title Company or to you
- A personal check for any balance. It won’t be much.