Mortgage settlement is also referred to as closing. It is when the home buyer, seller, title services company representative, and lender meet to change hands of the property and funds legally. There are also many fees that are associated with closing known as closing costs. What exactly these fees are and who is expected to pay them can be quite confusing since it sometimes varies depending on the situation. Most of the closing costs are going to fall on the buyer, however there is some room for negotiation when the initial offer on the home is made. Knowing what your closing costs are going into closing is very important to make sure you have a successful settlement. Using title services from a reputable title services company can help make the closing process run more smoothly and successfully.
Individual Closing Costs
Closing costs refer to a variety of expenses above the purchase price of the property to include fees for an attorney, a title search, title insurance, taxes, lender costs, and upfront housing costs like insurance. When it comes to buying a house, anytime someone performs an administrative task there is typically a fee associated with it. Often times, the buyer is going to pay any fees relating to their mortgage loan, and the seller usually pays the agent’s commissions and other fees associated with the transfer of the property.
As the buyer, three days before your scheduled closing you should receive your closing disclosure from your lender which will contain the final details about your loan and closing costs. Closing costs can be broken down into several categories including lender fees, title fees, prepaid costs (example: Escrows), and attorney’s fees. Lender fees can either be wrapped in an “origination fee”, or they can be broken down into individual fees like courier fees, appraisal costs, administrative fees, processing fees, a credit check, transfer taxes, a flood certification, and underwriting fees. Title fees include the costs associated with a title search, title insurance, and settlement services. Prepaid costs in many cases involve paying one year of homeowner’s insurance plus two months of homeowner’s insurance premiums to be kept for the next bill due. Typically you are also required to pay two to six months of property taxes depending on when the tax bill is due.
How to Prepare
Before you go to settlement, there are a few things you’ll probably want to do. The first is to review the closing disclosure which outlines the terms of your loan including final closing costs, and any additional outstanding charges of fees. Once you have signed the closing disclosure, there is a three-day waiting period before you can sign the mortgage loan documents.
It is also a good idea to do a final walk through of the property to verify that all agreed upon repairs were made, that the seller has vacated the property, and that the home is in the condition you expected. The time to do a walkthrough is almost always dictated by the contract. It is recommended that you do it 24 hours before going to settlement. If you notice any significant problems, you will have time to get further inspections done or work performed prior to closing. You should also make arrangements to transfer the utilities in your name effective the day of closing.
You’ll also have to bring with you a cashier’s check or wire funds to pay closing costs and escrow items, and a form of government-issued identification, This can include a driver’s license and passports. Usually, only one type of ID is required, although there are some cases in which two forms are required.
Knowing what to expect when you walk into the settlement is the best way to be prepared and to help ensure that everything runs smoothly. You might want to just walk away with your new set of house keys, but you also need to make sure that everything during settlements goes as expected. Mathis Title Company will help you prepare for the entire closing process from top to bottom.
What to Expect During Closing
For buyers, the settlement involves a lot of paperwork. You will have to sign many documents, a primary one being a settlement sheet, which explains the flow of all funds- in and out. You will be presented with a loan estimate, closing disclosure, the initial escrow statement, deed of trust, mortgage Note, and other documents required by state law or by your lender. Signing all of these documents is what takes care of the legal aspect of the settlement. Finally, the keys to the home are exchanged.
For more information about closing costs please reach out to Mathis Title Company at (703)-865-7880.