You’ve found the home you want, and your offer was accepted. You have your financing, and any contingencies have been met. Your lender has said that you are “clear to close,” so now the sale of the property to you can proceed. All you have to do at this point is show up at the closing with a cashier’s check made out in the amount the title company told you.
Twenty-four to forty-eight hours before the closing, you will have received a copy of your HUD-1 closing statement, as well as all the other documents you will have to sign. Once you hand over the check to the title company and then sign your name to these documents, the house will be yours.
A title company is a business that coordinates the task of transferring the ownership of the property to you. They collect all the funds in their escrow account, and disburse them appropriately at the closing. The sale of homes is regulated by the government and many steps need to be done to satisfy the regulations and to make sure the property is truly free and clear of any liens.
The title companies will examine public records to see if there are any liens against the property or the seller that would hinder its sale. They also check to see if the property has any easements attached to it. For example, some properties have gas or oil wells on them, the rights to which have been given to a utility company. If this is the case, the company will have the right to drive their repair trucks on your land if they need to do work on their wells.
The title company makes sure you know about easements and encumbrances ahead of time. If anything arises in the course of their research that is or could be problematic, they will inform each party, and everyone will have the right to renegotiate the terms of the purchase agreement or mortgage loan, or to back out of it completely. You will also get title insurance to protect you against any liens the title company didn’t find that surface in the future.
The title companies will contact you shortly after the purchase agreement has been signed in order to set up a specific closing date. Your lender will give you a Good Faith Estimate of what your portion of the closing costs will be. The title company will also coordinate with the lender to find out what money, if any, the lender will expect from you at the closing (e.g., the down payment). They will then tell you specifically how much money you will need to bring to the closing, and will tell you to bring it in the form of a cashier’s check.
You’ll have a couple of weeks notice about this, which is a good thing, especially if your money is not immediately liquid. This gives you time to make any transfers or arrangements you need to.
Title companies are usually selected by the seller. They insure that each party completes the steps they need to get done before the closing so when everyone meets to sign the documents there are no surprises and the transfer of ownership proceeds smoothly. They also make sure that the appropriate government offices get whatever paperwork and payments they require for filing new ownership documents, for recording the deed, and for paying any property taxes owed by the seller and the buyer.
Your realtor will be on hand at the closing, and this is the point at which she will be paid her commission.
A day or two before your closing, the title company will send you a complete set of the papers you will have to sign at the closing. Read them carefully before the meeting and make sure you understand what you will be signing. Ask the title company for clarification if you have any questions, or hire a lawyer if you have any legal questions.
One of the documents will be the final HUD-1 settlement statement, which will outline every single cost for the transaction. It should align very closely with the Good Faith Estimate you were given earlier. If it doesn’t, call your lender immediately.
Do not forget to turn the funds you need into a cashier’s check: you may also wire funds. Remember also to bring your driver’s license with you, or some other form of government picture ID.
Once you finish signing all the paperwork, the home will be yours and you’ll be handed the keys. Now it’s time to celebrate. Congratulations on being a new home owner and a job well done!
Call Susanne today at 614-975-9650 to ask any questions about the closing or the role of title companies.