It is customary for the closing agent to receive a “title order” from a real estate agent, loan officer, purchaser or a refinancing owner in preparation of a closing. The closing agent will then order a title search, a location survey (if required), payoff statements, and real estate tax information in preparation of closing. Within a few weeks prior to closing, the closing agent will schedule a closing date with the lender and the parties involved, as well as, clear title and issue title insurance commitments to the respective parties.

The day before closing or on the day of closing, the lender will provide final loan instructions to the closing agent along with the lender documentation. Upon receipt of these items, the closing agent will prepare the final Closing Disclosure form and conduct closing with the parties.

Generally, the actual closing involves an explanation of the documentation by the closing agent and the acquiring of signatures, which takes approximately one hour. In some cases, there may be subsequent adjustments to the Closing Disclosure form or other documentation that will require a longer closing time. At the time of closing or shortly thereafter, the lender will remit funds to the closing agent’s escrow account for disbursement.

It is your choice as a refinancing owner or a purchaser of the property to select the closing agent.

While the functions performed and services provided by the closing agent include those matters previously described, the most important role played by the closing agent is the issuance of the title insurance policy. Without the closing agent’s ability to issue a title insurance policy, your transaction could not proceed to closing.

Ultimately, the most vital function of the closing agent is issuing a title insurance policy, and since title insurance policies are all substantively equal, the closing agent is simply providing a commodity necessary to complete the transaction. Unlike our competitors, you will receive your owner’s title insurance policy at closing for no additional charge.

You should expect to pay variable and non-variable fees, including variable and non-variable title charges:

Variable fees and costs – Both the types and amounts of fees and costs will vary widely among closing agents and attorneys. Items to look for include:

• Settlement/closing fee
• Ttitle search/abstract fee
• Title insurance premium
• Title insurance binder fee
• Location survey fee
• Courier/overnight fee
• Notary fee
• Document preparation fee, etc.

Non-variable costs – These costs include the District of Columbia transfer and recordation taxes, along with the costs charged by the District of Columbia for recording of the deed, deed of trust (mortgage) and other documents that require recordation.

Unless otherwise negotiated in the sales contract, the standard purchase transaction will require that the purchaser pay the recordation tax and that the seller pay the transfer tax.

DC Recordation is calculated using the purchase price.

• Transactions $399,999 and under are taxed at the rate of 1.1% of the purchase price.(Example: $300,000 x 1.1% = $3,300, so the buyer and seller each pay $3,300 for a total of $6,600 paid to DC.)
• Transactions $400,000 and above are taxed at the rate of 1.45% of the purchase price.(Example: $500,000 x 1.45% = $7,250. So the buyer and seller would each pay $7,250 for a total of $14,500 paid to DC.)

Yes. Because title insurance is not regulated in the District of Columbia, these fees and costs will widely vary among closing agents.

READ MORE: DC TITLE INSURANCE RATES

To the lender, a refinance loan is no different than any other home loan. So your lender wants to insure that the new loan is protected by title insurance, just like the original lender required on your previous loan. When you bought your house, you bought a policy for both yourself (an owner’s policy) and the lender (a lender’s policy), but when you refinance, you are only buying a new title for the lender (a lender’s policy).

Typically, once a lender buys your loan, they immediately sell it to secondary market investors. In order to protect its security interest in the loan, these secondary investors require that the loan has lender’s title insurance. Lenders are protecting their investment against title related defects.

Yes, you bought a lender’s policy when you bought your house. However, unlike the owner’s title policy which doesn’t expire until you (or your heirs) sell the house, the lender’s policy expires when the loan is paid off. When you refinance, the original loan is paid off and a new loan is issued, therefore requiring a new lender’s title policy.

A lender’s title policy expires when the loan is paid off.

Since the original loan was issued, you may have taken out a second mortgage, had mechanic’s liens, child support liens or legal judgments recorded against you, which are all issues that could result in a financial loss to the lender. Even if it has only been six months, there are still title defects that could arise. So the only way for the lender to protect their investment, is to require a new lender title policy with each new loan.

Title insurers paid approximately $460 million in claims in 2001, according to American Land Title Association (ALTA). This figure was up over $100 million from $350 million in 2000. Compensation was paid to insured homeowners either for losses they experienced under policies issued to them or to defend their titles from the claims of others.

Generally speaking, homeowners assume there are rarely problems with titles; however, title problems arise in one out of every four real estate transactions, according to an ALTA survey of 420 abstractors and agent operations. In 2001 this would mean that 1.6 million of the 6.5 million residential real estate transactions had a problem with the title.

READ MORE: TITLE INSURANCE BY THE NUMBERS

The DC Tax Abatement Program was designed by the District of Columbia to help lower income residents purchase property.

Visit our DC Tax Abatement program guide for the most up-to-date information on qualifying incomes, purchase price restrictions and other documentation you’ll need to provide in your DC Tax Abatement program application packet.

READ MORE: DC Tax Abatement Overview

The Homestead Deduction subtracts $69,100.00 from the assessed value of your residential property before your real estate taxes are calculated. To be eligible, you must:

• Own the property
• Occupy the property as your principal residence (domicile)
• Complete the DC Homestead Deduction Application

An extension of the DC Homestead Deduction, this is a reduced real estate tax specifically for senior citizens. Real estate taxes are reduced by approximately 50%. To be eligible, you must:

• Be 65 years of age or older;
• You must own and live in your property;
• You and other senior citizens who occupy the property must own 50% or more of the property; and
• Total adjusted gross income of everyone living in the home must be less than $100,000.00 for the prior calendar year.

READ MORE: DC HOMESTEAD DEDUCTION OVERVIEW

Yes, there is an advantage. If you are a first-time homebuyer in the State of Maryland, then you are exempt from paying your portion of the State Transfer Tax (.25% of the Sales Price). Remember that ALL buyers must be first-time homebuyers in order to qualify for this exemption (e.g., if husband owned Maryland home prior to marriage, and now both husband and wife are purchasing a Maryland property, then the exemption would NOT apply). Federal Title & Escrow Company provides all paperwork for this exemption.

For more details, ask your Realtor or contact us.