What to Expect at Settlement

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What to expect at the settlement table. Every transaction is different, but most will follow a general path. Here's what to expect.
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   Closing Day/Sign Documents at Attorney’s Office - On closing day, all the documentsregarding the loan and settlement activities will be executed (signed) by the appropriateparties and notarized if necessary.Often the real estate agents are present at closing. Barring an emergency, I will accompany you to closing just in case I can help provide information or help with any last-minuteglitches. The Attorney will explain the documents and answer any questions you may have.Be prepared to sign many, many documents–the avalanche of paper! Among thedocuments you sign are those required by your lender, and many relate to your mortgage,taxes, and the different aspects of the property itself. Following is a list and brief explanation of  SOME of the documents you will encounter and/or sign:Settlement Statement(HUD-1) - This is a very important part of your settlement documents which shows your loan, closing costs, fees, etc. Your attorney  will prepare this statement and explain all the numbers toyou. We should receive a preliminary HUD statement forreview before closing.Deed / Deed of Trust - Deed: the legal instrument through which the Seller conveysthe real estate to you. Be sure you understand types of ownership and let the deed preparer know how you want totake ownership. One type of ownership used by marriedpeople is “Tenants by the entirety” in which the property automatically passes to the surviving spouse at the death of the other.Deed of Trust: At the time the Seller conveys the property toyou (the Buyer), you simultaneously convey the property (intrust) to trustees selected by the lender through the deed of trust. Essentially, legal title is transferred through the deed of trust to these trustees who hold title to the property until oneof two events occurs:1) The loan is paid off in full. Then the trustees convey the property back to you.2) The loan goes into default. The trustees can moreeasily foreclose on the property in case of default if the property belongs to them “in trust”.  The deed of trust may contain a “due on sale” clauseindicating that the loan becomes due and payable if you sellor transfer the property to another party. The deed of trustshould contain a clause disclosing whether or not there is apre-payment penalty in case you sell the property or refinancethe loan. Typed loan application - You probably provided a hand-written loan application toyour lender. However, that application will be typed and you will be asked to sign it at closing. Truth-in-Lending Statement - Discloses the true cost of your loan. Ask your lender for thisprior to closing.Name Affidavit - This document addresses variations of your name. Forinstance, Mrs. Jane Doe may be asked to sign that Jane Doe isthe same as Jane Reynolds (maiden name), Jane R.Doe, JaneElizabeth Reynolds Doe, J. Elizabeth Doe, Betty R. Doe, etc.,etc.Escrow Analysis - Your mortgage payment will probably include four items:Principal, interest, taxes, and insurance (PITI). A portion of the funds collected from you at closing will be used to startan escrow fund for taxes and insurance. Then a portion of each mortgage payment will go into the escrow fund, which ismanaged by your lender. When taxes and home owner’sinsurance are due, the funds will be paid from your escrow account. Escrow accounts are regulated by federal banking laws. Since insurance rates and taxes vary from time to time,you may sometimes be billed for additional funds to bring theescrow account up to the appropriate level. Conversely, (bestcase scenario!) you may receive a check from the escrow account because the law limits the amount that can be held inyour account. At closing your attorney will discuss theescrow process.Notice of Assignment of Loans - Sometimes mortgage companies sell loans to otherinstitutions. Even if your loan is transferred to anothercompany, the terms of your loan will remain the same.Under Federal law, lenders are required to disclose toborrowers the approximate percentage of loans that thelender sells to other lenders during the course of one year.During a four-year term of ownership of one of my personalhomes, I made payments to three different institutions!Flood Hazard Insurance - You may be asked to sign a statement regarding flood hazard  insurance.Mortgage/promissory note - Discloses the terms of the loan including amount you agreeto repay, interest rate, length of time for repayment.Copies of inspections - You may receive copies of well, septic, and termiteinspections beforehand, but at closing you will be asked tosign an acknowledgment that you have received copies of those tests. This settlement procedure will take approximately one hour. We hope the information we haveprovided will make settlement a little less intimidating. Remember–everyone has to go through itand at the end, you are a homeowner! Your attorney will let you know in advance how much money you need to bring toclosing. The funds should be in the form of a certified/cashiers check. POSSESSION - You probably will not receive the keys to your new home until the closing attorney has filed the necessary documents at the courthouse.  Jeremy Hart The NRVLiving Real Estate Group www.NRVLiving.com“Real Estate. Simplified.”
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