Purchasing or Selling a Home? What Does it mean to go to "Closing" or "Settlement"?

WHAT DOES A TITLE COMPANY DO? 

A title company's primary responsibility is to search the land records and clear any issues prior to closing, so that a clear and marketable title can be guaranteed, thus issuing title insurance to the lender (if applicable) and the owner. The lender will require the buyer to purchase a Title Insurance Policy on their behalf as a condition of making the loan.  The owner’s Title Insurance Policy is not required, but is highly recommended to protect one's ownership of the property. Other significant tasks handled on behalf of the buyer and seller are the preparation of the deed, settlement statement (HUD 1), and other settlement documents. After clear title, the title company will disburse all funds in accordance with lender instructions and contract terms. After closing, the deed and deed of trust are recorded in the public land records, funds are disbursed.

WHEN SHOULD I SELECT MY TITLE COMPANY?

As soon as you decide to purchase a home, you should begin the process of selecting a title company to handle your closing. Your lender and your real estate agent will be able to recommend you to title companies they have worked with. You should ask for a preliminary HUD-I from every company you speak to. Have the basic details available when asking for a HUD-I, such as how much you plan on spending and how much you plan on borrowing. Many times, title companies will compete for your business so it is best to let them know about other quotes you have received. 

WHAT IF THE SELLER DOES NOT WAN'T TO USE THE TITLE COMPANY I WANT TO USE?

If you have found a title company you are comfortable with, tell your Realtor. This is one reason why it is crucial that you have an experienced and knowledgeable real estate agent fighting for your best interest. One of many solutions is a split settlement, where the buyer and seller either settle at different times with the same company, or with different companies altogether. While negotiations can be stressful, your Realtor will make sure that you get the best deal possible, including the election of a title company that is going to provide excellent service at a competitive rate.

SHOULD I KEEP IN TOUCH WITH MY TITLE COMPANY?

Yes!  Be proactive. Call every week or so to ask how your file is progressing. If you are left in the dark about anything or do not receive a response, let your Realtor know immediately. You have the right to be well informed during every stage of the process. Ask the title company if they have someone that answers calls after hours, or if you can, have the owner or account representative’s cell phone number. You should feel 100% taken care of and in-the-loop the entire time.

WHEN WILL I KNOW HOW MUCH MONEY I NEED AT CLOSING?

Generally speaking, the lender will send the necessary items to the title company about two days ahead of closing (for a ballpark estimate further in advance, ask your lender). At this time, the HUD-I is prepared and must be approved by the lender. Once approved, the “FINAL HUD-I” is sent to all parties, and you will be advised of the final amount needed for closing. If you are a planner, you can send the bulk of the money to the title company in the form of a wire at any time, and if any additional funds are needed, most title companies will take a personal check for up to $2,000.00.

Remember to bring your ID and checkbook to closing. Good luck!

Thank you Kara Macdonald with Pruitt Title for assisting me. Pruitt Title is licensed in MD, DC & VA    www.pruitt-title.com

I would love to assist you.  Ellen Moyer, RE/MAX Allegiance Realtor   www.ellenmoyer.com   ellen.moyer@rmxtalk.com