Category Archives: Title Insurance

What to Expect From Your Settlement Company

When you finally find the perfect home for you and your family and the seller accepts your offer, you’re not quite across the finish line. There is still plenty of work to be done. For most homebuyers, the next move is to enlist the help of a settlement company.

Since buying a home isn’t something most people do every day, it’s not uncommon to not know what to expect from a settlement company. A settlement company essentially glues together the process of the sale, working with both you and the seller in the transaction – that means it is involved in a variety of activities involved in a closing.

There are four main categories of services that most settlement companies provide. Here’s a breakdown:

Title Insurance
First and foremost, a settlement services firm will provide your title insurance, which you need in order to finalize the purchase. They’ll search the property title, issue your title insurance commitment, and work with the seller to make sure that you receive a clear title. It’s their responsibility to distribute your final title commitment to all parties, including your lender, the real estate agents and/or your attorney, if applicable. After closing they’ll issue the owner and lender title insurance policies along with the recorded deed and mortgage.

Financial
When it comes down to the dollars and cents, your settlement company should help you in several ways. First, they should assist your lender in clearing mortgage conditions. They will also make sure deposits are received and credited at closing.

Your settlement company will prepare the HUD-1 settlement statement, which is also called a closing statement. They should review it with you prior to closing as well as at the closing. They will also disburse proceeds from the closing, assuring that all existing liens, judgments and real estate taxes are paid in full.

Legal
You don’t need to worry about legal jargon – your settlement company will help you with that. It’s their job to prepare the new deed conveying the property to you, the buyer. They will also record that brand new deed and mortgage, if applicable, with the appropriate county recorder of deeds.

Procedural
Then there are some things your settlement company may do to make the process go that much more smoothly for you. They will schedule the settlement, preparing and sending out settlement notices. They should also attend the closing at the location of your choice and take the time to review and explain the title and lender documents to you.

Back in the day, you would leave the closing table with a full ream of paper of unsigned copies of all of the lender documents. Today, the better companies will provide you an electronic copy of all of the documents you sign at closing, usually via a secure email link. They should also store an electronic copy of your documents in a secure location, just in case you need access to them in the future.

Purchasing a home can be very complex if you don’t do it every day, and a good settlement company will serve as your guide to ensure everything goes smoothly and that there aren’t any surprises.

Posted by Frank Dowd, Founder

Associates Land Transfer Company, LLC
(215) 699-1200
Twitter @ALTtitle
Visit http://www.ALTtitle.com for a complete and accurate title quote.

ALT Title Blog

Get a quick answer to your real estate questions from LOCAL real estate professionals! Ask the experts at ALT. Text your home buying or selling question to 215 808-6682 and get a quick opinion in minutes. Or you can direct message us on Facebook or Twitter, or call us if you prefer. We respect your privacy and will not share your personal information with anyone.

What to Expect From Your Settlement Company

When you finally find the perfect home for you and your family and the seller accepts your offer, you’re not quite across the finish line. There is still plenty of work to be done. For most homebuyers, the next move is to enlist the help of a settlement company.

Since buying a home isn’t something most people do every day, it’s not uncommon to not know what to expect from a settlement company. A settlement company essentially glues together the process of the sale, working with both you and the seller in the transaction – that means it is involved in a variety of activities involved in a closing.

There are four main categories of services that most settlement companies provide. Here’s a breakdown:

Title Insurance

First and foremost, a settlement services firm will provide your title insurance, which you need in order to finalize the purchase. They’ll search the property title, issue your title insurance commitment, and work with the seller to make sure that you receive a clear title. It’s their responsibility to distribute your final title commitment to all parties, including your lender, the real estate agents and/or your attorney, if applicable. After closing they’ll issue the owner and lender title insurance policies along with the recorded deed and mortgage.

Financial

When it comes down to the dollars and cents, your settlement company should help you in several ways. First, they should assist your lender in clearing mortgage conditions. They will also make sure deposits are received and credited at closing.

Your settlement company will prepare the HUD-1 settlement statement, which is also called a closing statement. They should review it with you prior to closing as well as at the closing. They will also disburse proceeds from the closing, assuring that all existing liens, judgments and real estate taxes are paid in full.

Legal

You don’t need to worry about legal jargon – your settlement company will help you with that. It’s their job to prepare the new deed conveying the property to you, the buyer. They will also record that brand new deed and mortgage, if applicable, with the appropriate county recorder of deeds.

Procedural

Then there are some things your settlement company may do to make the process go that much more smoothly for you. They will schedule the settlement, preparing and sending out settlement notices. They should also attend the closing at the location of your choice and take the time to review and explain the title and lender documents to you.

Back in the day, you would leave the closing table with a full ream of paper of unsigned copies of all of the lender documents. Today, the better companies will provide you an electronic copy of all of the documents you sign at closing, usually via a secure email link. They should also store an electronic copy of your documents in a secure location, just in case you need access to them in the future.

Purchasing a home can be very complex if you don’t do it every day, and a good settlement company will serve as your guide to ensure everything goes smoothly and that there aren’t any surprises.

Posted by Frank Dowd, Founder
Associates Land Transfer Company, LLC
(215) 699-1200
Twitter @ALTtitle
Visit http://www.ALTtitle.com for a complete and accurate title quote.

ALT Title Blog

Get a quick answer to your real estate questions from LOCAL real estate professionals! Ask the experts at ALT. Text your home buying or selling question to 215 808-6682 and get a quick opinion in minutes. Or you can direct message us on Facebook or Twitter, or call us if you prefer. We respect your privacy and will not share your personal information with anyone.

Is Shopping for a Title Insurance and Settlement Service Company a Waste of Time?

So, your realtor just referred you to a title insurance and settlement company. But that doesn’t mean that’s where you’ll get the best deal or the best service.

“Homebuyers should shop around because the cost of the services, as well as the services themselves, will vary greatly from company to company,” said Frank Dowd, Licensed Title Agent and Founder of Associates Land Transfer Company (ALT).

“When a customer contacts you for a title insurance quote, they’re really asking you to provide them with all of the title related fees that they’ll be required to pay at closing, not just the title premium,” he added. “All too often I speak to consumers that are shopping around and thoroughly confused.”

For many prospective homebuyers, title insurance and settlement services are a mystery to them. In addition to the title premium itself, there are a number of fees which can quickly add up to an additional $500 to $900, such as the lender-required endorsements and closing protection letter, county recording fees, miscellaneous processing, and notary fees.

“I find it disturbing when I see quotes coming in from other companies that don’t include everything they’re going to charge,” said Dowd. “It seems disingenuous to me; but it’s the nature of the industry.”

Fortunately, Dowd said that the word is spreading, and more people are learning that they have the opportunity to shop for title insurance and settlement services.  In two recent publications, both the FDIC and Consumer Financial Protection Bureau encouraged homebuyers to shop around for title insurance and settlement related services.

And Yes, If You’re Going to Have a Mortgage You DO Need Title Insurance

A title search and title insurance protect the lender and/or the homebuyer from any problems related to the property’s title, such as unpaid property taxes by a previous owner, or their long-lost heir who claims they have rights to the property, and more. Whenever a person buys a house, a title search is conducted to look for these types of problems in public records and to resolve any that arise before you go to closing. Title insurance (which is paid in a one-time fee at closing) protects you and the lender of your loan (if there is one) from any problems that arise or may have been missed. Even if you decide not to buy it for yourself, it will be required by your lender.

Choosing the right company for you

To find the right title insurance company for you, start with a little research of your own. Explore the internet and look for well-reviewed companies that have a strong track record in your state. You might want to ask family and friends to see if they have anyone they would recommend as well.

“I think it’s also good to hire an independent company where you will be talking directly to the principals of the company if necessary,” added Dowd. “I’m cautious of companies that do business in all 50 states because the customer service representatives you deal with aren’t always familiar with the particular municipalities within the state, and that’s important.”

When you have a list of companies, be sure to contact each one and compare their rates and fees. Get a detailed breakdown of their costs and learn how many closings they’ve done in your state – the more they have under their belt, the better. For the companies that took the time to invest in the most up-to-date technology, most (if not all) of this information will be available online.

You should also ask if there will be an experienced closer who can go through all of the documents with you at final settlement, or if they’re just sending a notary. “Some large national companies send a notary to closing, and if you have questions about documents, they can’t answer them for you. They’re just there to notarize the documents,” he said.

While this can seem like a fair amount of work, you’ll know that you’re in good hands when you find the right company, and that you won’t get any surprises.

Posted by Frank Dowd, Founder
Associates Land Transfer Company, LLC
(215) 699-1200
Twitter @ALTtitle
Visit http://www.ALTtitle.com for a complete and accurate title quote.

ALT Title Blog

Get a quick answer to your real estate questions from LOCAL real estate professionals! Ask the experts at ALT. Text your home buying or selling question to 215 808-6682 and get a quick opinion in minutes. Or you can direct message us on Facebook or Twitter, or call us if you prefer. We respect your privacy and will not share your personal information with anyone.

What Happens at Settlement?

If you’re in the final stretch of buying a new house, it’s still not quite time to pat yourself on the back. You’ve made it this far and are inches away from owning your dream home. Now that you’ve jumped through all of the necessary hoops and obstacles, there’s one final, significant hoop you must prepare for: Settlement Day.

As with every other step in the home buying process, it helps to know what to expect before you sit down at the settlement table. I know, you can practically feel those shiny new keys in your hand, but there is still a possibility that something might go wrong. Preparing in advance can help you avoid certain issues and increase the chance that everything will run smoothly.

Depending on your situation, the number of people who will be in attendance will vary. Aside from you and the seller of the house, other people who might be there include your or the seller’s attorney, real estate agents, a closing agent (someone from your title and settlement services company), as well as a loan officer, if you hired a local lender.

The closing can be held in any agreed upon location, such as your title and settlement services’ office, your lender’s office, or a real estate attorney’s office.

Once everyone is in the right room, business can begin. One of the main tasks you’ll be doing is reading and signing all of your loan documents.

The major items you need to sign during closing are the HUD-1 Settlement Statement (list of final credits and charges for you and the seller), the mortgage (document that says you agree to a lien on your property to ensure you’ll repay the loan), and the promissory note (a legal agreement that you will pay the mortgage lender on agreed terms).

Be sure to read this carefully; there may be a situation where something is different than what you expected or agreed to. In this case, you’ll need to resolve the issue before signing.

You’ll also need to prove that you obtained homeowner’s insurance and completed all necessary inspections, if applicable. If you’re making a down payment, you’ll then need to give a certified or cashier’s check to cover that as well as any other outstanding closing costs.

Additionally, you may need to create a new escrow account with your mortgage lender so you can pay your property taxes and homeowner’s insurance with your monthly mortgage payment.

As you can tell, there will be a lot to read and sign, and if your settlement company is “on the ball,” the process should take no more than an hour. In some cases, it may take a bit longer if your lender encounters any delays when sending their loan documents or the wire for your loan amount to the settlement company. If an unexpected issue pops up during your final walk-through inspection, that could create an additional delay as well. As a result, if you’re selling one house and buying another all in the same day, it might create a few challenges if either settlement gets delayed.

Our advice would be to avoid scheduling settlement for the last week of the month. There is a misconception in the real estate industry that if you make settlement at the end of the month, it saves the buyer money. Not only is this not true, but many lenders are so overwhelmed with the number of closings that are scheduled for the last week of the month, your chances for a delay increase significantly.

Sure it can be a long process, but once you walk through the front door of your new home, you’ll be happy you braved through it.

frank profile~posted by Frank Dowd, Founder
Associates Land Transfer Company, LLC
(215) 699-1200
Twitter @ALTtitle
Visit www.ALTtitle.com for a complete and accurate title quote.

Get a quick answer to your real estate questions from LOCAL real estate professionals! Ask the experts at ALT. Text your home buying or selling question to 215 808-6682 and get a quick opinion in minutes. Or you can direct message us on Facebook or Twitter, or call us if you prefer. We respect your privacy and will not share your personal information with anyone.

Yes, It’s True – Fees Are Negotiable When Buying a House

When you’re buying a new house, the actual house itself isn’t the only thing you’re paying for—there are a number of fees that are rolled into the final price in order to make it officially yours.

Although many experienced homebuyers are aware of the extra costs, there are plenty of first-timers who are hit with sticker shock upon receiving their good-faith estimate—and rightfully so. A five percent down payment on a $300,000 home, for example, is $15,000, but add in closing costs, and it could cost you triple.

However, while many of these closing costs must be paid, there are some that can be negotiated down, waived, or avoided altogether. According to the Federal Reserve, closing fees alone cost an average of three-to-six percent of the home’s sale price, but there’s no reason why you should pay it all if you don’t have to.

The Right Time to Negotiate
While you can address your concerns at any time, you should do so when you receive your good-faith estimates of closing costs from both your real estate agent and your lender. With an outline of the fees you’re expected to pay when buying or refinancing a home, you can easily review each item with the appropriate party and make your own determination as to whether or not the fee is reasonable or even necessary. It’s much easier to digest this information early in the process than to wait and try to get an accurate explanation while you’re being bombarded with various agreements and applications to sign.

Non-Negotiable Fees
Before you confront your lender, it’s important to have some background knowledge about which items are non-negotiable, such as government and some third-party fees (fees the lender pays to another party). These include transfer taxes and the cost of running a credit check, flood certification, appraisal, and inspection.

Although there’s no avoiding many of these costs, you should never be asked to pay more than what the third-party charges to perform the service.

Lender Fees
To determine the fees charged by your lender, ask him/her to prepare a good-faith estimate (GFE). The GFE is required by law and must disclose all lender fees and third-party fees as well. Depending on how these services are completed, fees may be waived or reduced. Generally, fees that are intended to cover the cost of your lender doing business can be negotiated. These might include fees charged for processing your application (loan origination fee), commitment fees, and underwriting fees.

Title Insurance and Settlement Services & Homeowner’s Insurance Fees
If you’re going to have a mortgage your lender will require that you have a lender’s title insurance policy as well as homeowner’s insurance. Your real estate agent or lender may offer these services through their in-house providers, but you are under no obligation to use them.

To ensure you only pay what’s required, the CFPB (Consumer Financial Protection Bureau) suggests that you shop around for your own title insurance and settlement services company. You also have the option to shop around for homeowner’s insurance and will often times get a discounted rate if you place your auto and homeowner’s insurance with the same carrier.

Brokers Service Fee or Flat Fee Commission
These fees have become very popular over the years and can range anywhere from $150 to $700. Basically, this is a fee sometimes charged by a real estate agent or broker (in addition to their sales commission) to process your transaction. This fee is negotiable as well. Often times your title insurance/settlement services company will provide these services for no additional charge.

Discount Point Fees
If you choose to pre-pay interest to lower the interest rate on your home loan, you may be charged with discount points or a higher origination fee to reduce the lifetime cost of your loan. However, you have the opportunity to negotiate them as well.

If these tips and tricks seem overwhelming, remember it’s your right to question fees you don’t understand. A helpful way to avoid getting duped during this process is to shop for these services early on in the process.

If spending a little time comparing the fees and services offered by multiple service providers can potentially save thousands of dollars, why not?

frank profile~posted by Frank Dowd, Founder
Associates Land Transfer Company, LLC
(215) 699-1200
Twitter @ALTtitle
Visit www.ALTtitle.com for a complete and accurate title quote.

Get a quick answer to your real estate questions from LOCAL real estate professionals! Ask the experts at ALT. Text your home buying or selling question to 215 808-6682 and get a quick opinion in minutes. Or you can direct message us on Facebook or Twitter, or call us if you prefer. We respect your privacy and will not share your personal information with anyone.

Do I Really Need Owner’s Title Insurance?

Between fees and unexpected additional costs, buying a house can end up costing more than you anticipated. So it’s totally normal to question those extra items and whether or not you really need them. Take owner’s title insurance. If you’re going to have a mortgage, your lender will insist on a lender’s policy, but is the optional owner’s policy really necessary?

The answer—which you may or may not be happy with—is an overwhelming ‘yes.’

And here’s why.

When you buy a house from someone, there’s no way for you to know if the seller is the true owner of the property. Sure he’s selling it and says he’s lived there for years without a problem, but would you be willing to stake hundreds of thousands (or even millions) of dollars on that claim? Although rare, there are scenarios when sellers turn out to be charlatans, giving away property that belongs to someone else in order to get your money. Or, there might be ownership issues that result from conflicting wills, missing heirs, old tax, or other municipal liens or judgments.

Although these stories may sound like a stretch to the skeptics out there, they can happen to anyone. And when it does, it can bring with it significant financial loss, or even the loss of your new house.

Unless, that is, you purchase owner’s title insurance.

Title insurance is a one-time fee that’s paid at closing and protects homebuyers (as well as their mortgage lenders) in the event that there is a dispute over the property’s rightful owner. If you do have a mortgage, the additional cost for the owner’s coverage is usually only a couple hundred dollars.

Although issues with the title are supposed to be found and addressed during the title search process, there are instances when a problem is overlooked or cannot be found in public records. With owner’s title insurance, you’ll be fully protected if a title problem arises after closing. This means that your title insurance company will cover the costs of defending your ownership interests. A nice deal, isn’t it?

While you should always purchase owner’s title insurance when buying a new house or property from a previous owner, you might have questions about whether it’s necessary in other circumstances. If you’re purchasing a newly built home, for example, you may wonder if title insurance is necessary since no one else technically lived there before you. However, it’s a smart investment because there were probably one or more previous owners of the land on which your house sits. A title search will help determine the boundaries of the property you’re buying, as well as any other issues with the land. (In any case, be sure to speak with your title insurance agent if you have any questions or concerns.)

Additionally, when you’re ready to purchase title insurance, do your shopping. Instead of just assuming that the builder’s in-house title company has your best interests at heart, compare their fees and services to other independent title and settlement services companies to ensure you get the best deal as well as an impartial set of eyes to represent your best interests.

At the end of the day, it’s better to be safe than sorry. While it’s rare that a missing heir will show up on your doorstep claiming the house is hers, it is possible.

Wouldn’t you want to have a safety net in place?

frank profile~posted by Frank Dowd, Founder
Associates Land Transfer Company, LLC
(215) 699-1200
Twitter @ALTtitle
Visit www.ALTtitle.com for a complete and accurate title quote.

Get a quick answer to your real estate questions from LOCAL real estate professionals! Ask the experts at ALT. Text your home buying or selling question to 215 808-6682 and get a quick opinion in minutes. Or you can direct message us on Facebook or Twitter, or call us if you prefer. We respect your privacy and will not share your personal information with anyone.

First Time Homebuyer’s Guide to Saving Money at the Settlement Table

Every spring the articles start popping up everywhere, “The five most important things you need to know about buying or selling a house.” As someone who started out twenty-five years ago selling real estate and has now been in the title industry for more than twenty years, I find that the information in the majority of these articles is not very informative and frankly, a waste of your time.

So many of these articles and blog posts give out easy information that falls into the category of common sense or simple enough to determine on your own.  You don’t need help answering fluffy questions like what kind of neighborhood do you want, or what’s the difference between an adjustable rate mortgage and a fixed rate mortgage?  Nobody seems to want to educate you about the process or give you enough insight for fear that you’ll start to ask questions that really matter like:

“Which monthly expenses affect the amount of money that I’ll be able to borrow?”
“Do I need a buyer’s agent and who pays them?”
“Are closing costs negotiable?”
“Who picks the settlement/title company and what do they do?”

The three primary players who will assist you with the purchase of your new home are your lender, your real estate agent/broker and your settlement company.  So it stands to reason that these are the three places to start asking questions in an effort to find potential savings on your home buying expenses.  As the buyer you get to choose who you work with and you can save yourself time, money and headaches by having a general understanding of the process before getting caught up in the emotion of finding the perfect house.

Let’s start with the lender. Everyone is looking for the lowest interest rate, but what will that rate ultimately cost you? Over the years the mortgage industry has become more and more competitive, to the point where most lenders quote rates within 18 to ¼ point of each other. If you’re paying $1,200 in additional fees to lower your mortgage payment by $7 per month, it might not be worth it. Conversely, if you’re short on cash you may be able to negotiate a slightly higher interest rate and receive a credit from the lender that covers your lender fees, title insurance and recording fees, reducing out-of-pocket expenses by a few thousand dollars. For the most part, application fees, processing fees and loan origination fees are all negotiable, but these fees vary from lender to lender.

When it comes to your real estate agent/broker, understand how the process and its related fees work. Typically the real estate professional that represents you as the buyer is paid a commission that actually is paid by the seller. However, if you’re being represented under the terms of a “buyer broker agreement,” under certain circumstances you could be responsible to pay all or part of the commission to your agent out of your pocket. Those situations are the exception rather than the rule, but it’s still important to know what you’re agreeing to before you sign a buyer broker agreement. In today’s market, especially on some larger transactions, we’ve seen the buyer’s agent credit a portion of their commission to be applied toward their client’s closing costs. It’s not common place in our market, but we’re seeing it more and more.

There are some fees that are negotiable with your real estate agent/broker.  Many real estate companies charge a broker’s services fee or flat fee commission to the buyer. We’ve seen this fee range anywhere from $150 to $700 depending upon the real estate agent/company. This is basically an administrative fee to process the transaction and this fee is negotiable as well. Our view has been that a modest administration fee may be appropriate, but if you hire a good settlement company they will perform the majority of the same administrative tasks at no additional fee, as this service is already included in the cost of your title insurance. If you’re using your real estate agent/broker’s in-house title and/or mortgage company, don’t even consider paying this additional fee. In addition to the commission, the profits they earn from their in-house mortgage/title business should be sufficient.

Understanding the role of your settlement company will also help you save on your closing costs and title insurance fees. The settlement company is paid out of the one-time premium that you pay for title insurance. In both PA & NJ, the buyer has the right to choose their own settlement company. The title insurance premium, lender endorsements and lender closing services letter are not negotiable, but there are hundreds of dollars in miscellaneous title fees that are. Some companies will even cover all or part of the county recording fees. When you factor in the savings that you might realize by hiring your own settlement company and have them process all of the paperwork on your behalf, the total savings could reach $500 to $700 easily.

Educating yourself as to the home buying process requires more than knowing your credit score, researching school districts and knowing how much homes are selling for in a certain neighborhood. It’s also about the little things that may not seem all that significant, but can cost you thousands of dollars in unnecessary fees.

frank profile~by Frank Dowd, Title Insurance Agent, licensed in PA and NJ Principal at Associates Land Transfer Company, LLC
(215) 699-1200
Twitter @ALTtitle
Visit www.ALTtitle.com for a complete and accurate title quote.

Other posts by Frank Dowd:

Buying new construction? You’d better hire the right title company.

The value of having your own “Wrecking Crew.”

Get a quick answer to your real estate questions from LOCAL real estate professionals! Ask the experts at ALT. Text your home buying or selling question to 215 808-6682 and get a quick opinion in minutes. Or you can direct message us on Facebook or Twitter, or call us if you prefer. We respect your privacy and will not share your personal information with anyone.