This will be part two of our series of questions you should ask your title and escrow provider. Let’s get to it.
- Who will be at settlement? Real estate agents representing the buyers and sellers may attend settlement. In some cases, a loan officer or mortgage broker may also attend.
- What happens to escrow taxes and insurance for loans that are paid off? Most lenders require that the funds are held in escrow for taxes and homeowner’s insurance. When a mortgage is paid off, either in connection with a seller or a refinance, these funds are given directly to the borrower from the lender within a few weeks after settlement. Sometimes, the lender might credit this against the payoff amount it is due.
- When will the mortgage be paid off? Checks paying off all mortgages will be sent by overnight mail when the case is disbursed. We always collect extra days of interest on the mortgage loan to ensure that it is paid off in full. The lender will remit any overpayment to the borrower. Highland Title understands the urgency of disbursing mortgage payoffs and takes every action necessary to disburse funds well before the deadline.
- How do I know how much money is required to settle? If you are a buyer or borrower and are financing your purchase, you will receive an estimate of your closing costs at least three business days before settlement from your lender (known as the Closing Disclosure). This figure may change slightly, and you should be able to contact us one business day before settlement for the figure. If the figure is not available, you should use the figure given to you by your lender on the Closing Disclosure as a substitute. It is not uncommon for the figure to increase or decrease slightly at settlement, so it is a good practice to add 0.5% of your loan amount to the cashier’s check. If this exceeds what you need, you will receive a check for the difference when funds are disbursed.
- When do sellers/financers receive their money? By law, a settlement agent cannot disburse any of the funds it has received in a settlement until all documents that must be recorded are recorded in the circuit court land records. Once that occurs, the settlement agent has two business days to disburse the funds. In the case of sales, the documents are sent to the courthouse immediately after settlement. With refinances, the documents are sent the first business day after the borrower’s right to cancel expires. Highland Title understands the urgency of disbursing funds to its clients and takes every action necessary to disburse funds well before the deadline.
- What is title insurance, and is it necessary? Title insurance protects an owner’s and lender’s interest in the property. For owners, it ensures they have a clear title to occupy, use and sell it without the risk of loss from issues that arose before taking ownership. It’s a one-time expense based on the property’s purchase price. The owner’s title insurance protection extends throughout the time the policyholder owns the property and even after it is sold. The owner’s title insurance comes in standard and enhanced policies. Enhanced policies cost more and cover 28 additional risks than standard policies. Lenders will almost always require the borrower to purchase that title insurance on its behalf, protecting only the lender for the amount being borrowed. The lender’s title insurance does not cover the owner, and unlike owner’s policies that are more or less perpetual, the lender’s insurance lapses when the loan is paid off. Also, where the owner’s title insurance is optional, the lender’s coverage is mandatory. One significant benefit of buying owner’s title insurance is that you will receive a discount on the price of lender’s insurance every time you refinance your home.
While this is not the definitive list, we would encourage you to ask any question that comes to mind. We would love to hear from you at (703) 723-3300, or contact us here.