Settling On Your Purchase

The Moment You’ve Been Waiting For

 

Settlement is the final step in the purchase process. Preparations for settlement should start as soon as the contract of sale is accepted. This is the time to select your title company and begin corresponding with them to be sure there are no last minute surprises.

Your title company will be responsible for ordering the title examination and survey, providing the mortgage lender with a title insurance commitment, implementing proper steps to be sure the seller can convey marketable title, and scheduling the actual time and place for the closing with all concerned parties. In addition to coordinating all aspects of the closing, the settlement agent is responsible for preparing the documents necessary to convey title, create a mortgage lien and provide for a proper financial accounting according to the terms of the contract of sale and loan commitment. The title company also acts as a clearing house of information for all interested parties.

Although a title company usually gets involved in the latter stages of a purchase transaction, its skill and experience can help overcome many of the inevitable last minute hurdles. The expertise of a settlement agent can make the difference between the successful, timely fulfillment of a purchase agreement and costly delays or cancellation of the purchase or loan agreement.

The closing itself, which usually takes about one hour, tends to be rather busy with much to be done and many details to be coordinated. During the closing, numerous documents must be explained and signed, funds must be received and disbursed, last minute questions on the condition of the property and operation of systems must be answered and the keys must be delivered. In many instances, buyers need to coordinate settlement with the arrival of their movers and cannot afford and delays. Choosing a reputable, experienced title company is crucial to a smooth settlement.

 

The Settlement Statement

The settlement sheet, often referred to as the “HUD 1”, summarizes the financial aspects of the transaction. Its review is often the focal point of the closing. Basically the “HUD 1” translates the terms of your contract of sale and mortgage commitment into numbers, and acts as a balance sheet for an accounting between the buyer and the seller. Unfortunately, because settlements occur very soon after loan approval, final settlement sheets and estimates of actual closing costs are rarely available for review prior to settlement. However, you should be able to get a fairly accurate estimate of your costs before settlement day from your real estate agent and mortgage lender.

You will need to bring a certified or manager’s check in the amount of your estimate to settlement; most settlement agents will accept a personal check for any additional funds due or will issue you a refund check.

Since closing costs tend to be complicated, a basic understanding of the charges and how they are calculated can be very helpful in understanding what a settlement officer will explain to you at settlement.