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!

What Factors Prevent Clear Title?

magnifying-glass-145942_1280The last thing anyone wants in real estate is to be unable to buy or sell a home because of title problems. Defects, or “clouds,” on title at the very least can stall the real estate transaction, taking anywhere from days to months to resolve. Title companies and their agents work diligently to conduct a title search for each real estate transaction. Unmarketable titles not only prevent proper title transfers – they can be costly to resolve and ultimately result in the inability to sell a property.

Barriers to Settlement: Title Defects

A myriad of factors can prevent clear title and interfere with the closing process. Here are the most common:

  • Unknown or missing heirs
  • False impersonation
  • Liens
  • Prior owner judgments
  • Clerical errors in public records
  • Forgery
  • Fraudulent document execution
  • Inaccurate representation of marital status
  • Improper probation of wills
  • Boundary, survey or easement inaccuracies
  • Unreleased deed of trust

How Are Clouds on Title Resolved?

Resolving defects on title varies, depending on the issue preventing clear title and the circumstances surrounding it. The best way to protect against title problems is to work with a highly experienced title agent, ensure a thorough title search is conducted and purchase Owner’s Title Insurance. In some cases, the courts may need to get involved to “clear” title and render it marketable. In others, liens or judgments must be satisfied, or necessary paperwork completed to remove title defects before closing.

A Word About Title Insurance

Title insurance protects the lender and owner against title defects identified after the transaction closes. Most lender’s require a Lender’s Policy, and buyers are strongly encouraged to purchase an Owner’s policy to insure against significant financial loss. In some cases, the cost of an Owner’s policy may be included in seller concessions. Even if title appears to be “clear,” purchasing title insurance is highly recommended. Visit our title insurance page for additional information.

At Linear Title & Escrow, we are unwavering in our commitment to conduct a thorough title search for each real estate transaction. For help with your title concerns and questions, contact our friendly team today!

What Are the Most Frequently Asked Closing Questions?

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.

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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?

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?

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.

 

How to Expedite the Closing Process

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.

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.

 

 

 

The Year in Review

year-in-review

 

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.