Closing and Title Costs
It's the big day.
The day you go to the title or escrow company, sign your name on the dotted line, hand
over a check and prepare to take ownership of your new home.
It's also the day that you and the seller will pay "closing" or settlement costs, an
accumulation of separate charges paid to different entities for the professional services
associated with the buying and selling of real property.
It's too often a day filled with uncertainty and stress.
To help you better understand this confusing subject, the Land Title Association has
answered some of the questions most commonly asked about title, closing and closing
costs.
What services will I be paying for when I pay closing costs?
You will usually be paying for such things as real estate commissions, appraisal fees,
loan fees, escrow charges, advance payments such as property taxes and homeowner's
insurance, title insurance premiums, pest inspections and the like.
How much should I expect to pay in closing costs?
The amount you pay for closing costs will vary; however, when buying your home and
obtaining a new loan, an estimate of your closing costs will be provided to you pursuant
to the Real Estate Settlement Procedures Act after you submit your loan application. This
disclosure provides you with a good faith estimate of what your closing costs will be in
the real estate process. An itemized list of charges will be prepared when you close your
transaction and take title to your new property.
Can I pay for my closing costs in installments?
No, and it is easy to understand why. Many different parties will have fulfilled their
responsibilities and be awaiting payment upon closing. The title or escrow company will
disburse money to those parties, pursuant to the escrow instructions, when funds are
available.
Will I be allowed to write a personal check to cover my closing cost?
Your closing funds should be in the form of a cashier's check, issued by an institution
from the state of your purchase, made payable to the title company or escrow office in the
amount requested. A personal check may delay the closing or may be unacceptable to
the title or escrow company. An out-of-state check could also cause a delay in your
closing due to possible delays in clearing the check.
How much can I expect to pay for Title Insurance?
This point is often misunderstood. Although the title company or escrow office usually
serves as a meeting ground for closing the sale, only a small percentage of total closing
fees are actually for title insurance protection.
Your title insurance premium may actually amount to less than one percent of the
purchase price of your home, and less than ten percent of your total closing costs. The
title policy is good for as long as you and your heirs own the property with the payment of
only one premium.
Why are separate owner's and lender's title insurance policies issued?
Both you and your lender will want the security offered by title insurance. Your home is an
important purchase, and you will want to be certain your home is yours, all yours. Title
insurance companies insure your rights and interests in order to protect you against
claims.
Your lender is looking to insure the enforceability of their lien on your property and
marketability. What is meant by "marketability"? Local lenders will "originate" a loan here,
and, often, sell it to an out-of-state investor. This investor, who may never see the
property, needs to know that he has a valid and enforceable lien. Title insurance is the
way of making certain. Without a current title policy, the loan is essentially unmarketable.
What does my Title dollar pay for?
Title insurers, unlike property or casualty insurance companies, operate under the theory
of "risk elimination." Risk elimination can only be accomplished after an intensive period
of risk identification.
Title companies spend a high percentage of their operating revenue each year collecting,
storing, maintaining and analyzing official records for information that affects title to real
property. The issuance of a title insurance policy is highly labor-intensive. It is based
upon the maintenance of a title "plant" or library of title records, in many cases dating
back over a hundred years. Each day, recorded documents affecting real property are
posted to these plants so that when a title search on a particular parcel is requested, the
information is already organized for rapid and accurate retrieval.
Trained title experts are able, with the aid of their extensive title plants, to identify the
rights others may have in your property, such as recorded liens, legal actions, disputed
interests, rights of way or other encumbrances on your title. Before closing your
transaction, you can seek to "clear" those encumbrances which you do not wish to
assume.
The goal of title companies is to conduct such a thorough search and evaluation of public
records that no claims will ever arise. Of course, this is impossible--we live in an
imperfect world, where human error and changing legal interpretations make 100
percent risk elimination impossible. When claims do arise, title insurance companies
have professional claims personnel to make sure that your property rights are protected
pursuant to the terms of your policy.
To conclude, when you pay for your title insurance policy, you are paying for a team of
professionals who have worked together to deliver you a title insurance policy which
represents protection for your ownership of real property.
Who can I look for straight answers on title, closing, and closing costs?
Title or escrow company personnel are available to review and explain your title policy
and your closing statement.
Article by CLTA
The day you go to the title or escrow company, sign your name on the dotted line, hand
over a check and prepare to take ownership of your new home.
It's also the day that you and the seller will pay "closing" or settlement costs, an
accumulation of separate charges paid to different entities for the professional services
associated with the buying and selling of real property.
It's too often a day filled with uncertainty and stress.
To help you better understand this confusing subject, the Land Title Association has
answered some of the questions most commonly asked about title, closing and closing
costs.
What services will I be paying for when I pay closing costs?
You will usually be paying for such things as real estate commissions, appraisal fees,
loan fees, escrow charges, advance payments such as property taxes and homeowner's
insurance, title insurance premiums, pest inspections and the like.
How much should I expect to pay in closing costs?
The amount you pay for closing costs will vary; however, when buying your home and
obtaining a new loan, an estimate of your closing costs will be provided to you pursuant
to the Real Estate Settlement Procedures Act after you submit your loan application. This
disclosure provides you with a good faith estimate of what your closing costs will be in
the real estate process. An itemized list of charges will be prepared when you close your
transaction and take title to your new property.
Can I pay for my closing costs in installments?
No, and it is easy to understand why. Many different parties will have fulfilled their
responsibilities and be awaiting payment upon closing. The title or escrow company will
disburse money to those parties, pursuant to the escrow instructions, when funds are
available.
Will I be allowed to write a personal check to cover my closing cost?
Your closing funds should be in the form of a cashier's check, issued by an institution
from the state of your purchase, made payable to the title company or escrow office in the
amount requested. A personal check may delay the closing or may be unacceptable to
the title or escrow company. An out-of-state check could also cause a delay in your
closing due to possible delays in clearing the check.
How much can I expect to pay for Title Insurance?
This point is often misunderstood. Although the title company or escrow office usually
serves as a meeting ground for closing the sale, only a small percentage of total closing
fees are actually for title insurance protection.
Your title insurance premium may actually amount to less than one percent of the
purchase price of your home, and less than ten percent of your total closing costs. The
title policy is good for as long as you and your heirs own the property with the payment of
only one premium.
Why are separate owner's and lender's title insurance policies issued?
Both you and your lender will want the security offered by title insurance. Your home is an
important purchase, and you will want to be certain your home is yours, all yours. Title
insurance companies insure your rights and interests in order to protect you against
claims.
Your lender is looking to insure the enforceability of their lien on your property and
marketability. What is meant by "marketability"? Local lenders will "originate" a loan here,
and, often, sell it to an out-of-state investor. This investor, who may never see the
property, needs to know that he has a valid and enforceable lien. Title insurance is the
way of making certain. Without a current title policy, the loan is essentially unmarketable.
What does my Title dollar pay for?
Title insurers, unlike property or casualty insurance companies, operate under the theory
of "risk elimination." Risk elimination can only be accomplished after an intensive period
of risk identification.
Title companies spend a high percentage of their operating revenue each year collecting,
storing, maintaining and analyzing official records for information that affects title to real
property. The issuance of a title insurance policy is highly labor-intensive. It is based
upon the maintenance of a title "plant" or library of title records, in many cases dating
back over a hundred years. Each day, recorded documents affecting real property are
posted to these plants so that when a title search on a particular parcel is requested, the
information is already organized for rapid and accurate retrieval.
Trained title experts are able, with the aid of their extensive title plants, to identify the
rights others may have in your property, such as recorded liens, legal actions, disputed
interests, rights of way or other encumbrances on your title. Before closing your
transaction, you can seek to "clear" those encumbrances which you do not wish to
assume.
The goal of title companies is to conduct such a thorough search and evaluation of public
records that no claims will ever arise. Of course, this is impossible--we live in an
imperfect world, where human error and changing legal interpretations make 100
percent risk elimination impossible. When claims do arise, title insurance companies
have professional claims personnel to make sure that your property rights are protected
pursuant to the terms of your policy.
To conclude, when you pay for your title insurance policy, you are paying for a team of
professionals who have worked together to deliver you a title insurance policy which
represents protection for your ownership of real property.
Who can I look for straight answers on title, closing, and closing costs?
Title or escrow company personnel are available to review and explain your title policy
and your closing statement.
Article by CLTA
Still have questions? Contact me today for a
free consultation!
free consultation!
Colin O’Neal
Buyer’s Agent
200 North Rufe Snow Drive, Ste.102
Keller, TX 76248
(817) 898-0145 Office
(817) 898-1771 Fax
colin@househuntersdfw.com
Buyer’s Agent
200 North Rufe Snow Drive, Ste.102
Keller, TX 76248
(817) 898-0145 Office
(817) 898-1771 Fax
colin@househuntersdfw.com
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