In the state of Virginia, closings are conducted by independent closing agents and attorneys; both will be referred to as “closing agents” in this article.
Who decides the closing agent or attorney who will handle my closing?
It is your choice as a refinancing owner or a purchaser of the property to select the closing agent.
What services does the closing agent provide?
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 HUD-1 Settlement Statement 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 HUD-1 Settlement Statement 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.
What fees should I expect to pay the closing agent?
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 these fees and costs will vary widely among closing agents and attorneys and include such items as:
- Settlement/closing fee
- Title 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 transfer and recordation taxes charged by the State of Maryland and the respective county along with the costs charged by the county clerk’s office for recording of the deed, deed of trust (mortgage), and other documents which require recordation.
Unless otherwise negotiated in the sales contract, the standard purchase transaction will require that the purchaser(s) and the seller(s) split the total transfer and recordation costs. In a residential refinance transaction that does not include a transfer of ownership, only the state recordation tax will be charged based on the new loan amount less the principal balance of the existing mortgage(s) to be paid off at closing.
Why do I need title insurance?
Title insurance is a one-time charge assessed at settlement that protects a homebuyer in the event that the property title, which proves ownership, is flawed. Problems with the title can include outstanding mortgages or liens, easements, inaccurate notary acknowledgments and deeds, wills or trusts that contain wrong names or improper vestings.
Title companies offer two kinds of policies: an “enhanced” title policy and the “standard” title policy. The difference between the two is based on pre-purchase problems, such as a deck addition that was erected without a proper building permit, and post-purchase problems. While the standard policy would not cover such a problem, the new ALTA enhanced policy does. While it is more comprehensive than the old one, it also costs about 20 percent more.
It has become common for title companies to automatically assume homeowners want the more comprehensive and more expensive coverage, but buyers do have a choice. In fact, title insurance is not required by law. However, most lenders will not provide a mortgage without it. The cost, generally a few hundred dollars, varies based on the value of the property.
READ MORE: Compare title insurance policies
What is the difference between a lender’s & owner’s policy?
A lender’s policy protects the mortgage holder (the institution that owns your mortgage). If there is a fault in title that results in a loss, the mortgage holder will be paid back.
An owner’s policy protects you, the homebuyer, against a loss that may occur from a fault in your ownership or interest you have in the property. A title policy will protect the equity in your new home.
Compare coverage and pricing for different title policies; a “enhanced” title policy and the “standard” title policy.
What are some examples that a title policy would guard against?
Your title insurance policy will protect against a variety of defects. This is a short list of common examples:
- False impersonation of the true owner of the property by the seller or other persons previously in title
- Forged deeds, releases and other documents
- Deeds by persons of unsound mind
- Deeds by minors
- Invalid documents completed by an expired attorney
- Invalid deeds delivered after the death of the grantor
- Deeds by supposedly single persons but actually married
- Claims for unpaid estate inheritance and gift taxes against prior owners of your home
- Unrecorded easements – giving one party the right to enter another party’s property
- Undisclosed descendents of former owners of your home or the land on which it is situated
READ MORE: Title insurance claims
What factors should I consider in choosing a 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.
What documents will I be expected to sign at closing?
You will be required to sign numerous documents at the time of closing. In the majority of closings, the lender prepares and delivers the documents to the closing agent the day before or day of closing. Thus, most borrowers do not have the opportunity to review the documents prior to closing.
Moreover, most borrowers do not take the time to read the documents at closing because of time constraints. While the majority of the documents are simply disclosures and other non-binding notices to borrowers, a handful of the documents are vitally important and legally binding.
What do I need to do to prepare for closing?
Upon receipt of the ratified contract, our office will begin the process of conducting a title search and coordinating settlement with your lender.
If you have not already scheduled a date and time for your settlement convenient to all attendees, please call 202-362-1500 or contact us to do so, or you may have your real estate agent coordinate closing with us.
You will need to bring **Certified Funds/Cashier’s Check** with you to closing. You may also wire funds into our Escrow Account – please call us for instructions at 202-362-1500.
Please call our office one day prior to closing and we will provide you with the dollar amount you will need to bring to settlement. In the event we do not have figures from your lender and cannot provide you with an exact amount, you may refer to the Good Faith Estimate provided by your lender and use a personal check for any remaining balance due.
Please make checks payable to Federal Title & Escrow Company.