At Highland Title + Escrow, we deliver smooth settlements, but what exactly does that mean? Whether you are a first-time homebuyer or an experienced homeowner, knowing and understanding what happens during the closing process can be difficult. It’s also vital for you to understand what role you play in what is possibly the biggest purchase of your life.
Let’s start at the very beginning; we’ve heard that’s a very good place to start. In our area, the settlement process is often referred to as Contract to Closing. By the time the Highland Title team gets involved, a ratified contract is in place, and all parties involved have agreed on terms. Regardless of what the settlement process is called, we are ready to pull back the curtain so you know what is happening and how you can help.
Communication is key!
To begin with, you should be in constant communication with your lender. Quickly and consistently respond to their emails. Financial documents, verification of employment, letters explaining credit report concerns, as well as other documents will be requested, and the faster you respond, the better. It may be that your lender finds discrepancies and will need something else from you. If you take extended time to provide what is needed and they need clarification, you can see how time will quickly add up to delay your closing.
You will need to frequently speak with your title company, as well. You’ll receive a letter or email requesting information like the name of your lender, names (and correct spellings) of parties involved, and contact information. Returning this to us quickly is important in moving the process along.
Stick to the deadlines!
Once you have a ratified contract, the next important piece is to order a home inspection if you have a home inspection contingency. This contingency is usually 7-10 days long in the DMV and will not be extended. The turnaround time is quick, and while your agent may help you by recommending an inspector, you may only have a week from ratification.
The home inspection isn’t your only deadline. You may need a termite, radon or well and septic inspection, too! These need to be completed within 30 days of closing, and while your agent may be helping, it’s important to stay in the loop and know what needs to be done when.
If you are getting a conventional, VA or FHA loan, the financing contingency deadline approaches within 21-30 days. It’s important to stay in contact with your lender concerning how your financing is coming along to meet the contingency prior to closing. In addition, the appraisal goes hand-in-hand with your financing. Your lender will order the appraisal and receive the report. (A copy of the report should be provided to you; it’s your right to request one if not.) If the appraisal comes back at or above the sales price on the contract, everything will move forward. If it comes back below contract price, you may have a right to negotiate a new price or to get out of the contract altogether based on how the contract was prepared.
Getting your homeowner’s insurance lined up should be a priority, as well. In Northern Virginia, you must apply within seven days of contract ratification. Many people choose to work with their car insurance provider for homeowner’s insurance, but regardless of your choice, put your insurance company in contact with your lender so everything will be ready for closing.
What’s happening at Highland Title + Escrow?
Well, as soon as we get a contract, we order the title work. It’s typically done by one of our title abstractors who begins searching online title records. (In the past, they physically went to the courthouse to search record books.) The abstractor is looking for any outstanding judgments or liens against the property. They will confirm that the seller actually has the right to sell. This process is referred to as ‘clearing title’. When the title is cleared, we provide a title binder, a summary of the title work, to the lender or let them know if there are any discrepancies that should be cleared up.
We’ll order a survey, but it’s typically up to a buyer if a survey is done. “I always recommend that a buyer get a survey. If you are making the biggest investment of your life, it’s worth spending the money to prove what you own and where the property lines are. When viewing the property, just because there is a fence marking boundaries doesn’t guarantee that’s where the property line sits,” stated Scott Mozingo, Managing Attorney for Highland Title + Escrow.
We will be in communication with your lender to ensure they have the information they need from us. The title binder we send over will summarize the title work, what we need to clear up if anything is wrong and that we are issuing the title insurance for the property.
The lender will require the buyer to purchase a Lender’s Title Insurance Policy. This policy only provides coverage for the lender. While an Owner’s Title Insurance Policy isn’t mandatory, it is HIGHLY recommended. It ensures your ownership of the property as long as you (or an heir) own it. If you are on the fence when it comes to title insurance, please call us at (703) 723-3300 so we can discuss your concerns.
Next, we contact the buyer’s and seller’s Realtors®, the termite company, the well and septic company, etc; we are essentially ‘The Hub’. We are bringing everything in from all of the parties to get everything onto the settlement statement and closing documents for your signatures.
As Closing Day approaches, you will want to talk with your lender about the bottom line needed at closing. Check with the title company and lender about how those funds will be paid. At Highland Title + Escrow, we’ll accept a wire transfer or a certified or cashier’s check. Contact your bank early in the process to make sure you know how to order a wire or obtain a certified or cashier’s check. If you choose to wire, it may be helpful to ask your bank to wire a little more than requested in case the amount owed is more than expected. Needing more money to be wired may mean another wire transfer fee from your bank, and your transaction could be held up while waiting for the transfer. We’ll return the difference if it isn’t needed. There may also be small changes concerning the funds at closing so we will accept a personal check for up to $2,500.00.
We would be remiss if we didn’t take some time to talk about wire fraud. Fraudsters often gain access to an email address of a party involved in the transaction. As you read above, there are so many steps in the whole process, and it is often moving fast and furious. The scammer makes the email look like it’s coming from within and changes wiring instructions for his benefit…often at the last minute. Before it can be detected, the money has been wired to the fake account and is gone before anyone detects it’s missing. Check this out for one woman’s experience, and stay tuned for an upcoming blog concerning wire fraud red flags.
It’s Closing Day!
On Closing Day, you will typically do a walk-through of the property (it could be the night before). This ensures it’s in the same condition as it was on the contract date or the date of home inspection depending on what was selected in the contract.
When you come to your settlement appointment, you will need the following:
- A form of government ID – Your driver’s license or passport will work. Your work badge won’t.
- Your certified funds or wiring information
- Your checkbook – If there is a small discrepancy, we’ll accept payment in the form of a personal check. If you paid too much money, your checkbook contains bank account and routing numbers. We can wire money straight to your account using these numbers.
Once the paperwork is signed by all parties and all monies are in place…CONGRATULATIONS! You will receive your keys, and you are a homeowner. Click here to contact the title professionals of Highland Title + Escrow!