Tag Archives: real estate closings

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

Posted on by
Reply

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.

pexels-photo-208494

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.

 

 

 

 

 

 

 

What Are the Most Frequently Asked Closing Questions?

Posted on by
Reply

The the process of closing on your real estate purchase can be confusing, especially if you’re a first time home buyer. We’ve put together some of the most commonly asked questions surrounding settlement, to help make sense of the closing process.

pexels-photo-208494

Do I need to purchase title insurance? Lenders typically require that you purchase Lender’s Title Insurance, to protect the financial institution’s interest in providing you a home loan. Owner’s Title Insurance is highly recommended, as it protects your financial investment in the property you intend to purchase. Learn more about both types from our title insurance page.

How long does the settlement process take? The entire settlement process depends largely on the type of mortgage, but the average time to close is 30 to 45 days.

Will seller concessions include my title fees? Yes. Title fees typically include items like title search and the Lender’s Title Insurance premium. Costs like these are covered in transactions where sellers contribute to closing costs on behalf of the buyer.

What do I need to bring to the closing table? You’ll need to present your driver’s license or other government-issued ID. Depending on the lender, two forms of identification may be required. You’ll also need to bring a Cashier’s or Certified Check for the amount of your closing costs.

Have other questions? Here at Linear Title & Escrow, we work closely with lenders and agents to make the closing process as simple, streamlined and seamless as possible. For more information on title and escrow, contact our friendly team at (757) 340-0340 today!

What Are My Closing Costs When Selling a Home?

Posted on by
Reply

Our last post discussed closing cost breakdown on the buyer’s side of a real estate sale. But what closing costs can you expect when selling a home? The seller’s side of the Closing Disclosure form typically has fewer line items than that of the buyer, but the costs vary based on a number of factors.

Seller's Closing Costs

The two portions of seller’s closing cost having the most impact on the bottom line are the agent(s) sales commission and mortgage payoff balance. Though paid at closing out of the proceeds from selling your home, we’ll leave these aside when discussing fees associated with seller’s closing costs. Total seller’s closing costs typically average between six and 10 percent of the sale price, as reported by Realtor.com.

Understanding Seller’s Closing Costs

Here’s a breakdown of typical closing costs incurred when selling a property:

  • Loan Payoff Fee: Covers the cost of forwarding the loan payoff to the lender.
  • Lien or Judgment Releases: Settles any liens or judgments against the home.
  • Termite Letter: Covers the cost of a termite inspection. A termite inspection and letter are generally conducted and submitted prior to closing.
  • Home Warranty: The purchase of a service plan that covers the cost of repairing or replacing major systems and appliances in the home you are selling in the event breakdowns, damage or loss occurs. (This coverage typically lasts for one year after closing.)
  • Home Repairs: Often appear in the form of a credit to the buyer to cover the cost of any necessary (pre-negotiated) home repairs.
  • Homeowner Association Fees – Prorated based on the amount owed at closing. (If paid in full or through a date beyond closing, these amounts are prorated back to the seller and paid by the buyer.)
  • Condo/Co-op Fees: Also prorated based on the amount owed at closing. Like HOA fees, any amounts paid for in advance for time beyond the closing date are prorated back to the seller and paid by the buyer.
  • Property Taxes: This amount is prorated based on the percentage of the year the seller owned the property.
  • Deed Preparation Fee: Applies to the document composed to transfer title on the property from the seller to the buyer.
  • Storm Water Fee: Varies per city, and is charged to cover the cost of treating, storing and managing storm water runoff within the community.
  • Grantor’s Tax: Transfer tax paid to the state, which covers the cost of conveying the property from the seller to the buyer.
  • Notary Fee: Fee charged to verify signatures on closing documents. This typically applies if the seller is not local to where the transaction occurs.
  • Settlement Fee: Paid to the company or attorney conducting the closing and covers the cost of preparing documents and executing the transaction.
  • Seller Concessions: Paid by the seller on behalf of the buyer to cover the cost of certain closing fees. These amounts or items are negotiated prior to closing.

*These fees may vary based on state, city and county, and per mortgage product. Some may not be applicable, depending on the circumstances surrounding your closing.

Learn more about closing costs and the settlement process by contacting our friendly, knowledgeable team today! Call Linear Title & Escrow at (757) 340-0340 for additional information.

When Is the Best Time to Close on a Home?

Posted on by
Reply

Best Time to CloseBuying 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.

 

Title Terms to Know: Part Two

Posted on by
Reply

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.

Title Terms to Know: Part One

Posted on by
Reply

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.