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Get owner’s title insurance and buy your home with confidence
Here’s what to expect at closing! Your long home-buying journey is almost over, and found the home you love. Also, the seller agreed to your offer and now it’s time for closing. Of course, there’s a lot to think about right now, and the last thing you want is something to go wrong. So make sure you work with an experienced closing agent to help ensure the details come together and everything runs smoothly.
As soon as the seller accepts your offer, the behind-the-scenes work begins. You can expect closing to happen within 30 to 90 days. Here, we outline six steps that will help guide you along the home closing process.
Select a Closing Agent
First, your real estate agent places an order with a closing agent as soon as your sales contract is accepted. This is done with your permission. The closing agent can be a title company, an escrow company or a settlement company.
Most homebuyers rely on their real estate agent to select a closing agent—someone they work with regularly and know to be professional, reliable and efficient. However, you can choose your own closing agent if you wish. The closing agent will oversee the closing process and make sure everything happens in the right order and on time, without unnecessary delays or glitches.
Draw up an Escrow Agreement
Secondly, a closing agent reviews a contract or escrow agreement for completeness and accuracy once it is drafted. The agent will also put your deposit into an escrow account, where the funds will remain until closing.
Get a Title Search
Thirdly, the agent places a title order, and the title company conducts a search of public records. This should identify any issues with the title such as liens against the property, utility easements, and so on. A title professional takes care of problems if discovered, usually without you even knowing about it. After the title search is complete, the title company can provide a title insurance policy.
Expect to Shop for Title Insurance
Next, there are two kinds of title insurance coverage: a Lender’s policy, which covers the lender for the amount of the mortgage loan; and an Owner’s policy, which covers the homebuyer for the amount of the purchase price. If you are obtaining a loan, the bank or lender will typically require that you purchase a Lender’s policy. However, it only protects the lender.
Get an Owner’s policy of title insurance to protect your investment! The party that pays for the Owner’s policy varies from state to state, so ask your settlement agent for guidance before closing. The settlement agent is your closing expert.
Obtain a Closing Disclosure
Your lender must provide a Closing Disclosure to you at least three days prior to closing. Your lender may also have a closing agent provide the Closing Disclosure to you three days before you close your transaction.
If you or your lender makes certain significant changes between the time the Closing Disclosure form is given to you and the closing, you must be provided a new form and an additional three-business-day waiting period after receipt of the new form. This applies if the creditor:
- Makes changes to the APR above ⅛ of a percent for most loans (and ¼ of a percent for loans with irregular payments or periods)
- Changes the loan product
- Adds a prepayment penalty to the loan
If the changes are less significant, they can be disclosed on a revised Closing Disclosure form provided to you at or before closing, without delaying the closing.
The Finish Line: Prepare for Closing
As the day approaches, any updated information needed is gathered by the closing agent. Once the closing agent confirms with the lender and the seller, they will set a final date, time and location of the closing.
Finally, on closing day, expect all of the behind-the-scenes work is complete. While you’ve been busy packing, ordering utilities and coordinating the movers, your closing agent has been managing the closing process so that you can rest assured, knowing all the paperwork is in order.