On Good Terms: Common Real Estate, Mortgage and Closing Terminology to Know

How to get the mostWhether you’re on the hunt for a new home, considering a refinancing option or casually browsing the current real estate market, it’s good to have a sound understanding of what certain words or phrases relative to your efforts actually mean. We’ve compiled a list of terms you’ll likely encounter in such situations.

  1. Land Survey: Instrument that describes, maps and documents boundaries and characteristics of a property.
  2. Closing/Settlement: Finalizes the process of transferring ownership of a property from one party to the next.
  3. Closing Costs: Monies paid by buyers and sellers in the final settlement of a real estate transaction.
  4. CD Form (Closing Disclosure Form): Document that presents mortgage particulars, closing costs and detailed financial responsibility of the home buyer.
  5. Title Insurance: Protects the lender’s financial interests (Lender’s Policy) and homeowner’s rights to the property against loss due to title defects.
  6. Title Search: Process of reviewing the title history of a property for defects.
  7. Loan Discount Points: Also known as pre-paid interest. Allows a home buyer to pre-pay interest to lower the interest rate on a home loan. Each point paid equates to 1% of the loan amount.
  8. Mortgage Pre-Approval: Process of becoming approved by a lender to borrow up to a certain loan amount, after submitting financial documents such as bank statements, employment verification and tax returns, among others.
  9. Contingency: Clause included in a real estate contract that enables one or both parties to cancel the transaction based on certain circumstances.
  10. Buyer’s Agent: Real estate agent representing the home buyer(s) and their interests.
  11. Listing Agent: Real estate agent representing the home seller(s) and their interests.
  12. Adjustable-Rate Mortgage (ARM): Mortgage in which the interest rate fluctuates based on market conditions, causing the monthly loan payments to increase or decrease.
  13. Fixed-Rate Mortgage: Mortgage in which the interest rate is fixed over a specified period of time (typically 15 or 30 years).
  14. Loan Origination: Performed by the lender, and encompasses all phases of the loan process, from initial application to release of funds.
  15. Escrow Agent: Third party responsible for holding and maintaining all funds and documents related to a real estate transaction until closing.
  16. Escrow: Type of account established by the lender. Holds a portion of each monthly mortgage payment, the collective funds of which are used to pay property taxes and homeowner’s insurance on an annual basis, or when due.
  17. Home Appraisal: Professional third-party assessment performed to determine the fair market value of a property.
  18. Home Inspection: Professional third-party service designed to determine the current condition of a home. Finding are produced in a document rendered to the lender and home buyer.
  19. Seller Concessions: Certain closing costs paid by the home seller on behalf of the home buyer.
  20. Private Mortgage Insurance (PMI): Type of insurance often required on conventional loans, when the borrowers put less than a 20 percent down payment on a home. Remains in effect until loan-to-value reaches less than 80 percent.
  21. Short Sale: Real estate sale in which the amount received for a home is less than the loan balance. In this case, the lender agrees to accept less than what is owed on the property.
  22. HOA Fees or Assessment: Monthly, yearly or bi-annual fees or one-time payments assessed by a homeowner association, collected for the purpose to maintain, improve, develop or further modify private residential neighborhoods.
  23. Amortization: Describes the payment of a loan over time, through a series of regular monthly mortgage payments.

 

Have questions about other real estate, mortgage or closing terms? Contact our friendly team at Linear Title & Escrow today!

Q: “Can I Choose My Own Title Insurance Company?”

This is a question we’re often asked when preparing for a real estate closing. If you’re looking into buying a new home, be aware that title insurance is typically an important factor in the closing process.

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What Is Title Insurance?

Title insurance is a type of insurance policy that covers the mortgage lender’s interests in the transaction (Lender’s Title Insurance) and your financial investment in the property as the future homeowner (Owner’s Title Insurance). However, it’s important to understand that title insurance on your property doesn’t fall under the blanket protection of a single policy: Lender’s and Owner’s Title Insurance policies are indeed separate policies, each of which carry its own premium.

Lender’s Insurance Is Usually Required. Owner’s Insurance Is Highly Recommended.

Let’s start by saying that purchasing a Lender’s Title Insurance Policy is usually non-negotiable. Most mortgage lenders require homebuyers to have this type of policy to cover their interests in the case of title defect or other issue. But an Owner’s Title Insurance Policy, on the other hand, is entirely optional.

We do, however, strongly advise that you purchase an Owner’s policy, to protect against the loss of your home, further financial responsibilities and time in court in the event that clouds or defects on the title to your home surface in the future. See our page on title insurance to learn more on the benefits of having this coverage.

The Option to Choose Depends on Your State

Since purchasing Owner’s Title Insurance is optional, many homebuyers wish to know if they can choose their own title insurance company, or shop around for the best deal. In some states, this may be allowed. However, Virginia maintains strict regulations over the insurance industry, leading most underwriters to remain competitive in their pricing when it comes to premiums.

Whether you choose a standard or enhanced Owner’s Title Insurance plan, the difference in fees from one insurance provider to the next will likely be negligible. It’s also worth noting that purchasing an Owner’s Policy enables a discount on the Lender’s Policy, known as a “simultaneous discount rate.”

 

At Linear Title & Escrow, we put the interests of the homebuyers and sellers we are privileged enough to work with first. Our process of procuring title insurance involves working with only the most reputable insurance companies in the industry. For more information on title insurance policies or premiums, please contact us today.

 

 

 

 

 

 

 

Must Sellers Be Present at Closing?

It’s widely understood that homebuyers must be present when closing on their real estate purchase, as mortgage notes and other documents must be signed at that time. But are sellers required to attend closings with their buyers? Read on as we discuss the role of the seller in closing on a home.

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Do Buyers and Sellers Meet at the Closing Table?

If you’re a first-time homebuyer or selling the first home you’ve ever owned, you may be wondering whether buyers and sellers come face-to-face at the closing table. However, such a scenario rarely happens. Both the buyer and seller do, in fact, have their own closings. But the process and requirements are a bit different, depending on which side of the transaction you sit.

The Seller’s Closing

From the seller’s vantage point, it’s fair to say that the closing process involves much less paperwork, and even less time compared with that of the buyer. The seller’s closing must take place prior to the buyer’s in order to convey the property in a proper and legal manner.

In some scenarios, sellers are located out-of-state, and are unable to attend the closing in person. Closings in such a case take place virtually, or via mail, with sellers signing necessary documents in the presence of a notary, and said documents being promptly transferred or delivered to the closing agent.

The following is general information regarding the seller’s closing process:

  • Sellers may or may not be required be physically attend the closing.
  • The seller’s closing takes place before that of the buyer’s.
  • Documents to be signed include the Seller’s Closing Disclosure Form/ALTA or HUD, Warranty Deed and Loan Payoff Agreement.
  • Proper identification must be presented at the time of closing.
  • Wiring instructions regarding proceeds of the sale must be clearly specified (if applicable).

Have questions about your role as a seller? Contact Linear Title & Escrow for answers today!

 

A Day in the Life of a Title Agent

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Ever wondered what, exactly, title agents do all day? Are we busy? Are we bored? Do we sit around drinking coffee and checking our Facebook feeds?

No. Nope. Not even close. We take our coffee on the go (because let’s face it – caffeine is one of the four main food groups). We work non-stop, from the second we arrive at the office to the moment we leave for the day. Our days demand the ultimate in multi-tasking, fine attention to detail, and sheer excellence in time management. But what makes up the fabric of our day? What do we really do that keeps us so busy?

An Average Day as a Title Agent (Though No Day Is Ever Really Average)

When it comes to preparing for a closing, a great deal goes on behind the scenes. The daily responsibilities of a title agent range from preparing closing documents to conducting title searches and reviewing Closing Disclosure (CD) forms. We read and respond to hundreds of emails from lenders, agents, attorneys and other parties involved in settlement proceedings, and prioritize our daily agenda to deliver the highest level of efficiency for each of our clients.

Our duties include (but are not limited to):

  • Prepare closing documents
  • Transfer closing documents to CD forms
  • Review CD forms for upcoming closings
  • Enter revisions on CD forms
  • Compile title binders
  • Execute title searches
  • Research and resolve title issues
  • Prepare files for title orders
  • Ensure funding for loans
  • Coordinate CD instructions with lenders
  • …and a whole host of other title and escrow-related duties

How We Stand Out Among the Crowd

No day is the same as the next. At Linear Title & Escrow, our ultimate goal as title agents is to work diligently, competently and thoroughly at ensuring the most efficient closing possible for our clients. We strive to be quick, but highly efficient (which is important for lenders, clients and ultimately home buyers/sellers). We strive to be competitive with returning title requests back to lenders, typically within one week of said request. And most importantly, we maintain integrity, confidentiality, and strict adherence to regulations and the highest level of standards in our industry.

Yes, we are busy – but we love what we do. For more on how Linear Title & Escrow works  to create smooth, seamless closings, contact our team today!