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 remitted directly to the borrower from the lender within a few weeks after settlement. In some cases, the lender might credit this against the payoff amount it is due.
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 insure that it is paid off in full. The lender will remit to the borrower any over-payment. Highland Title understands the urgency of disbursing mortgage payoffs and takes every action necessary to disburse funds well before the required deadline.
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 prior to settlement from your lender (known as the “Closing Disclosure”). This figure may change slightly, however, 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 and so it is a good practice to add 0.5% of your loan amount to the cashiers check. If this exceeds what you need, you will receive a check for the difference when funds are disbursed.
By law, a settlement agent cannot disburse any of the funds it has received in a settlement until all documents that must be recorded (i.e. the deed and the mortgage) are actually 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 required deadline.
Title insurance is designed to protect an owners’ and lenders’ interest in the property. For owners it insures that they have clear title, i.e. not subject to the claims of others, in the property, so that they can occupy, use and sell it without the risk of loss from issues that arose prior to taking ownership. It’s a one-time expense which is based on the purchase price of the property. Owner’s title insurance protection extends throughout the time the policyholder owns the property and even after it is sold. 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 that title insurance be purchased on its behalf by the borrower which will protect only the lender for the amount being borrowed. Lender’s title insurance does not protect the owner and, unlike owner’s policies that are more or less perpetual, lender’s insurance lapses when the loan is paid off. Also, where owner’s title insurance is optional, lender’s coverage is mandatory. One major 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.
The parties review the settlement statement for accuracy. With sales, the seller executes a few documents, including a deed transferring title to the property to the buyers. Buyers and refinancers review and execute loan documents and tender a cashiers check, where necessary, to pay the amount due on the settlement statement. The entire process normally takes one hour.
Everyone signing documents at settlement must bring a valid picture identification issued by a government entity to settlement. Sellers should also bring items such as keys, garage door openers, manuals, parking or pool permits. Buyers must bring certified funds (i.e. cashiers check) made payable to Highland Title & Escrow for the amount due for their purchase. Anyone expecting to receive funds from a settlement and wish to have it wired to a bank account, should bring wiring information for that account.
Our fees are fixed, for the most part, based on the type of transaction (i.e. sales, refinances, home equity loans). Title insurance premiums are calculated based on the sale and/or loan amount. All parties can expect to pay government recordation/transfer taxes. Borrowers will incur lender’s fees, interest and tax and insurance escrows at settlement. Borrowers should contact their loan officer prior to closing to determine the amount of funds needed. Remember, the settlement agent is required by law to collect readily available funds such as a cashier’s check. Click here to access Highland Title’s Settlement Calculator.
In the case of sales, the buyer and the seller designate the settlement agent in the sales contract. Sometimes the buyer and the seller each select their own settlement agent, and the settlement occurs in two different locations. With refinances, usually the lender recommends the settlement agent, but the homeowner has the right to select who they wish.
Buyers, sellers and refinances who can’t attend settlement can appoint someone as their attorney-in-fact to attend settlement on their behalf. To do this the person who will be absent from settlement must sign a power of attorney in the presence of a notary public. The power of attorney must be approved by us, and in some cases, the lender. Also, the original power of attorney must be provided to us at or before settlement.
Real estate agents representing the buyers and sellers may attend settlement. In some cases, a loan officer or mortgage broker may also attend.
With sales, the settlement date is agreed to by the parties in the contract. It is normally fixed to allow enough time to satisfy all the conditions of the contract and to arrange the financing. Settlements on refinances are scheduled when the lender is ready to proceed with the loan.