You’ve found the perfect house, the one situated around your dream kitchen positioned within mere steps leading to a backyard straight off the pages of Home and Garden. Or Coastal Living. Or Southern Living…or whichever style tickles your fancy. You and your family are beyond excited to start a new life in the confines of your perfect home, and can’t wait to begin the process of decorating your new space to your heart’s content, maybe with new furniture or outdoor seating or painting the walls the latest Pantone color of the year.

Whether you’re a first-time home buyer or seasoned pro, you likely have the experience all planned out in your head, probably wishing you could simply snap your fingers to bring you from contract to close. But, there is a process to closing. And having a general idea of the fundamentals of the closing procedure can help keep a positive perspective and realistic expectations on the time it takes to close on your new home.

Common Terms Relative to the Closing Process

We often post discussions related to closing terms, concepts and procedures. Getting back to the basics of the closing process, there are a few common terms that are good to know, or of which to refresh your understanding if it’s been a few years since your last closing.

-Loan Estimate: Document detailing the estimated loan payments, interest rate and other pertinent information of the mortgage product for which you are applying. A Loan Estimate is provided by your mortgage lender within three business days of your home loan application date.

-Closing Disclosure (CD) Form: Document presenting the details of your home loan, terms, closing costs and other information relative to your real estate purchase. The CD form is provided by your lender at least three business days prior to your scheduled closing date.

-Title Search: A process by which a title agent/company investigates the history of a property with respect to proper transfer of ownership, claims to property and a host of other legal factors that may affect the marketable condition of title on a piece of real estate.

-Title Insurance: Types of insurance policies that protect the lender’s interest and your interest (as the homeowner) in a property. Lender’s Title Insurance Policies are required by most mortgage lenders, whereas Owner’s Title Insurance isn’t required but is highly recommended. Visit our Title Insurance page for more on the importance of having Owner’s Title Insurance.

-Escrow: Third-party handling of a real estate transaction, with respect to the holding of funds and management of documentation relevant to the property until said monies or documents are ready to be dispersed.

From Contract to Close

Knowing what happens from the time you sign your real estate contract to when the keys to your dream home become yours is important for newbies and old pros. Keep in mind, what follows here is a general overview of the process that begins with a real estate contract and ends at the closing table. Additional steps or requirements may be necessary, depending on your mortgage product, timeframe and unique set of circumstances.

1. Signing your real estate contract
2. Securing your home loan
3. Home appraisal
4. Home inspection
5. Review of CD Form
6. Final walk-through
7. Closing day!

No matter your level of experience in the home buying process, Linear Title & Escrow is here to streamline the closing experience. Contact our experienced team today!

“Reverse mortgage” is a term we seem to hear more of today. Created for senior adults aged 62 and older, a reverse mortgage (also known as a Home Equity Conversion Mortgage) allows a homeowner to cash out a portion of the equity in their home. Borrowers can elect to receive their funds on a monthly basis or in a lump sum, depending upon the loan type. According to Reversemortgage.org, the amount received depends upon factors that include the age of the homeowner(s), appraisal value of the home and current interest rates.

A reverse mortgage can be a supplemental income source for senior adults, allowing homeowners to liquidize home equity with the promise of no monthly mortgage payments. Reverse mortgages often are used to cover general living expenses, home renovations, medical bills and even to pay off an existing mortgage.

The balance of a reverse mortgage loan is paid when the last surviving homeowner vacates the property or passes away, and the heirs sell the home. The proceeds of the sale are then used to repay the balance of the reverse mortgage, and any remaining equity is passed on to the homeowner’s heirs.

Key Factors of a Reverse Mortgage

• Insured by the Federal Housing Authority
• Issued by a mortgage lender
• Applicants must attend credit counseling
• Minimum age requirement is 62 (youngest borrower)
• Property must be primary residence
• No monthly mortgage payments
• Utilizes a property’s equity as loan collateral
• Structured as a refinance or new purchase loan
• Fixed and adjustable rates available
• Taxes, property insurance and HOA fees paid by borrower
• Condition of property must be maintained
• Must be the only lien on the property
• Interest accrues (compounds) throughout the life of the loan
• Interest paid only on amount received (at repayment)

The Closing Process for a Reverse Mortgage

Closing on a reverse mortgage varies a bit from traditional real estate settlement. In place of the Closing Disclosure (CD) Form, a HUD Settlement Statement is used to itemize fees and other details pertinent to this form of loan. Mortgage Insurance Premium (MIP) is 2% of the home’s appraisal value or FHA lending limit ($679,650), whichever is less. Servicing fee set-aside is processed during closing, deducted from the proceeds of the loan and used to cover anticipated costs of servicing the loan throughout amortization. Remaining closing fees are generally comparable to those standard to any other type of mortgage, and vary by lender; however, additional fees and documentation may also apply.

This information is meant to provide a general overview on reverse mortgages and closing on this type of loan. Please contact a loan officer or credit counseling agency for more information on reverse mortgage products.

Have questions on closing a reverse mortgage? We can help! Contact Linear Title & Escrow today.