What is the Process of Settlement?

imagesThe day you sell your home to Express Homebuyers can be one of the happiest days of your life. Our experience as we buy houses DC, Baltimore and Virginia homeowners want to sell quickly, easily and at a fair price has given us the pleasure of seeing smiling faces as we help solve problems and make the process simple and fast. The actual sale takes place at a “closing,” which is also called a settlement.

Settlement refers to the process of transferring ownership of real estate from one person or entity to another. Ownership in real estate is determined by who is on the title. Title is a legal term for a bundle of rights in a piece of real estate in which a party owns a legal interest. The rights in the bundle may be separated and held by different parties. Title also refers to a formal document that provides evidence of ownership.

Upon the successful completion of your home visit with our Homebuying Specialist, Express Homebuyers will submit your information along with your signed financial authorization letter and signed purchase agreement to the settlement company.

Upon receipt of the information we submit, the settlement company confirms they have all the necessary information they need to begin the settlement process. If additional information is needed, they will contact our company (or you) for any missing documents.

What happens at closing?

The buyer will sign many documents related to the purchase of the home. These documents will include the HUD-1 settlement statement, the note, the deed of trust or mortgage and several others. To prepare your property for closing, the settlement company will order a title search and updated lien payoffs. A title search is a process by which the settlement company researches the history of the property through the land records to ensure that you are the actual owner and that there are no complications in the current ownership and titling of the property. They also request updated lien payoffs which means they request a final payoff amount from your mortgage company and any other liens attached to your house. The payoff is the exact dollar amount that needs to be paid off on the day of settlement. Sometimes, upon performing this due diligence, the settlement company will discover things that you as the owner never knew existed, or they will encounter mistakes that were once made by other banks or companies. The settlement company is usually able to get information easily and schedule your settlement for the date originally planned.

In cases where the settlement company encounters problems in the title or additional lien payoffs, it usually takes additional time to resolve such issues. It is their duty to produce clear and equitable title so that our company can buy your property. In cases where the title isn’t clear they may have to do some additional research or talk to additional people to ensure that they can resolve any issues they see. In cases where they find there are additional liens on your property, it will take them more time to get payoff information on each lien so that it can be incorporated into your final payoff. In these situations, the settlement company does its best to keep to the original settlement date, but sometimes they may need additional time to resolve these items, thus delaying settlement by a few days.

The settlement company coordinates and schedules the settlement date with you and Express Homebuyers on the day and time that is most convenient for you. Settlement is conducted at the office of the settlement company or at a place convenient for you. They request that you bring all your house keys, a form of identification, and a voided check with you to settlement. The voided check will provide account information for the proceeds to be wired to. The settlement process usually takes 30-45 minutes. You will meet with a settlement attorney who will explain the entire process to you. During this time, the settlement attorney will confirm that you are the owner of the property. They will then review with you and have you sign a HUD-1 settlement statement, which details all debits and credits that you are to receive upon the sale of the house. They will also review with you the new deed of the property in which you will sign, granting ownership of the property to Express Homebuyers. Finally, they will confirm how and when you would like your proceeds disbursed. State law in Virginia, unlike Maryland and the District, require the new deed to be recorded prior to disbursing funds to any party in the transaction.

What do the Buyer and Seller Pay at Closing?

At closing, the buyer will usually pay for all lender closing costs, title fees, up-front interest (if any), escrows and ½ of the transfer taxes. The seller will usually pay for all real estate commissions (if any), closing fees and ½ of the transfer taxes. They will also pay off any mortgages against the property and any outstanding water bills.

What is a HUD-1?

The HUD-1 Settlement Statement is a standard form used to itemize charges and credits to the buyer by the lender and/or broker. It is signed by both the buyer and the seller. The borrower has the right to inspect the HUD-1 prior to or on the day of settlement. The form is completed by the settlement agent or attorney who will conduct the settlement. Borrowers can compare their good faith estimate to the HUD-1 Settlement Statement to ensure no changes have been made at, or prior to, settlement. Click here for a sample HUD-1.

What is the note?

The note represents the buyers promise to pay back the loan to the lender and contains important terms of the loan, including the interest rate, loan amount and length of the loan.

What is the deed of trust?

A deed of trust is a legal document granting title in real property to a trustee, who holds it as security for a loan between the lender and the home owner. The borrower is often referred to as the trustor and the lender is referred to as the beneficiary of the deed of trust. Deeds of Trust differ from mortgages in that deeds of trust always involve a third party, who holds the legal title. With mortgages, the mortgagor gives legal title directly to the mortgagee (borrower). In both cases, equitable title remains with the borrower. Virginia, Maryland and the District of Columbia all use deeds of trust, rather than mortgages.

The deed of trust normally gets recorded with the county clerk for the county where the property is located as evidence of and security for the debt. Recording provides constructive notice to the world that the property has had a lien placed on it. When the debt is paid in full, the beneficiary is required to have the trustee transfer the property back to the trustor, thus releasing the security for the loan.

What is a Good Faith Estimate?

A good faith estimate (GFE) must be provided by a mortgage lender within three days of your loan application. Providing a GFE is required by the Real Estate Settlement Procedures Act (RESPA). The GFE is an itemized list of fees and costs associated with the loan. It can be used to compare different lenders fees and products. It can be difficult to compare if lenders don’t list the same costs in the same way.

What is title insurance?

Title insurance is insurance that protects against financial loss from defects in title to real estate. It will defend against a lawsuit against the title as it is insured, or reimburse the insured for the actual damages incurred, up to the dollar amount of insurance provided by the policy. There are two types of title insurance: Owners Coverage, which protects the owner and Lenders Coverage, which protects the Lender. The Lenders policy is mandatory and is required by the bank to protect their interest in the property. Unlike car or life insurance, title insurance is only paid once, at closing and protects the owner for as long as they own the property.

Sell Your House This Week

Ready to sell your house to Express Homebuyers – the company homeowners trust for fast and easy transactions? Call Express Homebuyers now toll-free at (877) 804-5252. Or fill out our easy on-line request form and we’ll get things started. We buy houses DC! We buy houses Maryland! We buy houses Fairfax VA! And, yes, we buy houses Virginia!

Real estate agents want you to fix up everything and they can take a long time. And I really wanted the process to be done quickly. I was fortunate Express Homebuyers bought my home “as is” and there was no stress on my end. I learned selling your home doesn’t have to be a nightmare.”

Hazel Middleton