Buying a home is an exciting venture, whether it’s the first time or the fifth. It takes a certain amount of strategizing, from finding the perfect location to getting your offer accepted. Once approved for your home loan, the last step is to lock in your rate and count the days until your closing date. But when is the best time to close on a home? Is there a certain time that works more to your advantage?
Closing Date Comparisons
It’s largely assumed that closing on the last day or as close to the end of the month as possible is the best choice. However, this isn’t true for all cases. The following compares the benefits and drawbacks of closing at varying times within the month. Keep in mind the date on which you close affects when your first mortgage payment is due.
- Beginning of the Month: Closing early in the month does require that you pay a good deal of interest for the remaining days of the closing month. But it also leaves you almost two full months before making that first mortgage payment. (For example, if you close November 4th, your initial loan payment is due January 1st of the following year.) The benefit is the substantial cost savings you’ll gain by not having to make a mortgage payment for nearly two months.
- Middle of the Month: Closing between the 15th and the end of the month sets your first mortgage payment a full month out. (For instance, if you close between October 15th and October 31st, your first loan payment is due on December 1st.) You must take into consideration the amount of interest you’ll incur and be required to prepay during the closing month.
- End of the Month: Closing towards end of the month ensures the amount of daily accrued interest you pay is minimized (for that month). This can add up to a significant savings in closing costs, when you consider paying interest on one to two days as opposed to 15 or more. Like the middle of the month example, your first mortgage payment would be due a full month out.
Consider the Circumstances
Many people prefer to close at the end of the month, to avoid paying additional interest. But bear in mind that the last few days of the month are the busiest times for lenders and title companies. Loans can often be pushed through more efficiently during slower times. The “funnel-effect” at the end of the month, at times, leads to closing date delays.
You may not have full control over which day your closing actually takes place. Certain factors may cause your closing to be delayed, and even moved into early days of the next month, depending on how the days fall. In such as case, you’ll pay more interest, but have nearly two months before you’re expected to remit your first mortgage payment.
Have questions on the closing process? The Linear Title & Escrow team is always here to help! Contact us today at (757) 340-0340.
If you’ve ever bought or sold a home, or are currently in the process, the term “appraisal” is likely one with which you’re very familiar. An appraisal is a process that determines the fair market value of a home or property for sale. It’s also a crucial part of whether or not a lender decides to approve a home loan. If the appraisal comes back lower than the asking price, the loan request will likely be denied.
What Goes Into a Home Appraisal?
The lender is the party that orders the appraisal. An approved appraiser is contracted to complete the process, and visits the property to perform the assessment. A number of things factor into the final appraisal value of a property, such as the following:
- Condition of interior and exterior portions of the home
- Overall size of the home and lot
- Age and location of the home
- Square footage of each room
- Number of bedrooms, bathrooms, etc.
- Features, upgrades or improvements made to the home
- Unique geographic aspects, like water-front, beach or mountain views
- Comparable information (recent home sales in the neighborhood, zip code and surrounding area)
If the Appraisal Comes Back Low, Should You Spring for a Second?
Typically, the seller pays for the appraisal. However, some lender’s require the buyer to cover this cost. The seller wants the highest price possible, but the buyer also wants to be approved for the loan. If the appraised amount comes back off the mark, either party has the opportunity to order a new appraisal, at their own expense. According to HomeAdvisor.com, the national average cost of a home appraisal is currently $316. (The average for the Hampton Roads area is a bit higher, at around $450.)
Appraisals are an integral part of the home buying and selling process, and almost always required for residential real estate transactions.
Have a question about a real estate transaction or the closing process? Contact the Linear Title & Escrow team today at (757) 340.0340!
Closing on a new home is one of the most exciting things consumers have the privilege of doing. After months of searching for the perfect place, submitting an offer and negotiating terms of the sale, the time to closing can seem like an eternity. While this procedure may seem arduous, and at times emotionally taxing, there are a few things you can do to expedite the closing process.
5 Tips for Streamlining Settlement
When purchasing a new home or even refinancing your current property, keep the following tips in mind for the most efficient, expedited closing possible:
- Complete pre-approval process and loan application promptly. The sooner you submit your application to the loan officer, the faster you can get the ball rolling on the closing process. Ensure the information you provide on your application is accurate, though, or else you will experience a delay.
- Have all required paperwork gathered in one location and ready to go. This includes important documents like pay stubs and proof of other income sources, W-2’s, tax returns for the previous two years and all bank statements. The settlement process is often delayed due to waiting for all necessary paperwork and information be submitted; this inevitably lengthens the time it takes for loan packages to be completed, and ultimately time to close.
- Request a home appraisal as soon as possible. This is contingent upon getting all required documentation for your loan application submitted as quickly as possible. Once this occurs, your loan officer can initiate the appraisal request.
- Stay in constant communication with your representative. Remain active in the communication process by frequently checking in with your agent. It’s also crucial to reply to inquiries about your loan as soon as possible, providing a quick response to phone calls, letters, emails and requests for additional information.
- Be available to sign the Closing Disclosure (CD) form 3 days prior to settlement. Be aware, this document is submitted via email and signed electronically. The longer you wait to sign, the more time accrues until that closing day. Keep a close watch on your email account so that this step can be completed as early as possible.
Linear Title & Escrow has been providing settlement services to the Greater Hampton Roads area for the past 10 years. We take great pride in providing a streamlined, efficient and highly professional closing experience, and look forward to serving the needs of our community for many years to come. Learn more about how to expedite your closing process by contacting our friendly, experienced team today at 757.340.0340.
In place for over a year now, the TILA-RESPA Integrated Disclosure (TRID) rule set forth by the Consumer Financial Protection Bureau has certainly impacted the process of buying real estate. The intent of tightening regulations within the mortgage industry was meant to streamline and simplify the process for home buyers, while reducing the paper count and confusion of residential real estate purchases in previous years.
Here’s a closer look at how stricter regulation in the mortgage industry has affected the process of buying a home.
From the Home Buyer’s Perspective
- Changes to settlement forms. Lenders are now required to provide more detailed, thorough information surrounding the mortgage loan to home buyers prior to closing, which is largely accomplished through the Closing Disclosure Form (replacing the HUD-1). Such changes better enable consumers to understand their risks and costs associated with taking on a mortgage.
- Enhanced awareness of mortgage terms. Though the pre-approval process is relatively the same, borrowers are now more aware of the terms of their mortgage, generating less confusion and fewer surprises at the closing table. TRID mandates that home buyers receive a copy of the Closing Disclosure Form for review at least three days prior to closing.
- Time to settlement. With TRID, the timeframe between contract and close has increased slightly, though overall, no major impact has been experienced. In general, purchasers have fewer questions at the closing table resulting from enhanced understanding of mortgage details.
Thanks to TRID, the explanation and interpretation of often complicated mortgage information has rendered residential real estate purchasers better informed about their mortgage responsibilities. In fact, all parties involved in the real estate transaction now typically experience a congruence throughout the process, right through to the day of closing. For questions or concerns regarding real estate settlement, contact Linear Title & Escrow at (757) 340.0340 today.
As we begin the final countdown to the year’s end, it’s always interesting to reflect on how things have changed over the past 12 months. This season kindly offers a chance to celebrate successes, milestones and positive experiences, or strengthen our resolve and hope the upcoming year brings the progression and prosperity we seek. The title industry has certainly experienced its share of changes in 2016. Here’s a glance at the year in review from a settlement standpoint.
Changes 2016 Brought to the Settlement Process
- First Full-Year of TRID in Effect – The Truth in Lending Act/Real Estate Settlement Procedures Act Integrated Disclosure Rule (TRID) simplifies consumer disclosure information by improving readability of content regarding terms of impending real estate transactions. The Consumer Financial Protection Bureau requires that lenders submit the Closing Disclosure Form to homebuyers three days prior to closing.
- February 23, 2016 – The American Land Title Association/National Society of Professional Surveyors Survey Standards is enacted, bringing forth greater utility and clarity of survey items in terms of how they are displayed on the survey form, and the content of items included within the survey. A list of revised survey form topics can be viewed here.
- March 21, 2016 – Foreclosure Relief and Extension for Service Members Act passes, extending the one-year foreclosure protection for military personnel through the end of 2017 (part of the Service Members Civil Relief Act).
- July 1, 2016 – House Bill 393 (General Assembly of Virginia) takes effect, delegating that the designated license producer of a title agency must be a director, officer or employee of said company, dissolving the practice of an independent contractor fulfilling this role.
As we look forward to a successful 2017, we welcome any changes designed to make the entire settlement process more streamlined, transparent and ultimately more efficient for all parties. The team at Linear Title & Escrow remains committed to providing clients with the highest level of service in the industry, and wishes you and yours a very healthy, prosperous New Year.
In this post, we continue our breakdown of title terminology, specifically relating to the Closing Disclosure (CD) form.
Title Terms Continued
Unless otherwise noted, these terms apply to/appear on the buyer’s side of the real estate transaction:
- Title Insurance: Protects parties against financial loss should clouds, liens or other claims on title arise. (See our Title Insurance page for more detailed information.)
- Owner’s Policy: Title insurance covering the homeowner’s interests should a defect on title become apparent.
- Lender’s Policy: Title insurance covering the mortgage lender’s interests in the event of title problems (required by lenders at the expense of the homeowner).
- Settlement/Closing Fee: Amount charged by the title agency/closing attorney to process the close of property sale. (May also appear as “Title Services.”)
- Title Search/Title Exam Fee: Amount charged to research history of title and identify any defects, liens or claims of ownership surrounding the property.
- Recording Fees/Recording Charges: Fees charged to record the transfer of title from one party to the other with the appropriate municipality (split to satisfy that of both the deed and the mortgage).
- City/County/State Tax Stamps: Revenue collected on the sale of a property, generally for the purpose of supporting community improvement initiatives.
- CPL (Closing Protection Letter) Fee: Covers the cost of insurance issued by the title insurer regarding actions carried out by the title agent/underwriter/closer.
- Grantor’s Tax: Amount remitted to the Clerk of Court for recordation of deed (typically paid by the seller).
At Linear Title & Escrow we remain steadfast in our commitment to excellence, providing exceptional service, streamlining communication, and facilitating a smooth and efficient real estate transaction. For more information on the title terms presented in our two-part series or questions regarding the settlement process, please contact us today at (757) 340.0340.
Unless you work directly in the title or settlement business, navigating the murky waters of title terminology is a challenge for most individuals, particularly individuals new to the home-buying experience. Even those well-seasoned in the mortgage or real estate industries often find themselves a bit puzzled on what each line on the Closing Disclosure form truly represents. Here at Linear Title & Escrow, “title terminology” and the meaning behind each individual component are our bread and butter, and we’re more than happy to break it down in a clear, obvious way.
Whether you’re an agent or just looking to better understand the settlement process, brush up on your title terms and their meanings with Part One of our handy little guide.
Know These Terms Before You Buy
- Closing Disclosure Form (CD): A standardized document used to list/itemize credits or fees owed by the buyer (to the mortgage broker or lender) when purchasing or refinancing real estate property.
- Earnest Money: A sum of money (deposit) placed toward a piece of real estate, indicating the intent of the buyer to indeed go through with the purchasing process. This amount is typically applied to the down payment or closing costs.
- Origination Charge: Fee charged by the lender to process the loan application for the purchase or refinance of a property.
- Mortgage Points: A percentage of the loan charged by the lender/broker for the purpose of originating the loan (covers their fees and commissions).
- Mortgage Discount Points/Credits: Prepaid interest remitted by the buyer at closing for the purpose of reducing the mortgage interest rate.
- Adjusted Origination Charges: The loan origination charge less the amount paid in discount points/credits.
- Transfer Taxes: The tax imposed on passing the property title from one party to another, a portion of which is expressed as a percentage of the property value. The percentage amount paid varies per state.
- Mortgage Insurance: Insurance required by brokers/lenders when down payment is less than a pre-determined percentage of the property’s purchase price/refinance amount. (See MIP and PMI terms below for further information.)
- Mortgage Interest Premium (MIP): Applies to all FHA loans and incorporated into the total monthly mortgage payment. MIP is required for the life of the loan while the loan-to-value (LTV) ratio remains greater than 90%, and for 11 years if the initial LTV ratio is 90% or less.
- Private Mortgage Insurance (PMI): Applies to conventional loans when the initial down payment is less than 20% of the property’s purchase price.
- Aggregate Adjustment: Typically, zero or a negative amount. If negative, this figure will reduce the amount the borrower must place into escrow at closing.
Check back soon for the second installment of our title terminology guide in the article, “Title Terms to Know: Part Two.”
Our professional, courteous team at Linear Title & Escrow is always ready to answer your questions regarding the settlement process for your real estate property. Contact us today at (757) 340.3440 to learn more.