The Settlement Process

The Settlement Process and Closing, It’s the process that occurs between the time a property seller accepts the purchase agreement and the buyer takes ownership of the house. In other words, it’s the process whereby the title or ownership to the property is transferred to the buyer. It also refers to the process of refinancing a property.

For a refinancing, the settlement / closing process typically begins when you apply for a new loan and ends when the old loan is paid off and the new loan is made. The closing process for a home purchase may take thirty to sixty days. The closing process for refinancing is approximately thirty days or less.

Your settlement agent will be your main point of contact. He/She handle all of the requirements prior to the scheduling of the closing date. Once your transaction is cleared to close and the closing date is scheduled, then the Closing agent works with you and your lender throughout the remainder of the closing process.

What can I expect at the settlement or closing for a purchase transaction?

While settlement / closing practices may vary from state to state, the following representatives are generally present at the closing for a purchase transaction:
Home buyer, Home seller, seller's real estate agent, buyer’s real estate agent;
Title company representative (where applicable);
Attorney(s): The buyer, seller and lender may have attorneys;
Closing agent: The agent conducts the closing and ensures all documents are signed properly;
Mortgagor (the person buying the house) and Mortgagee (the lender);
At the closing, the seller signs documents transferring property ownership to the buyer. The buyer receives as well as sign documents related to the mortgage agreement and ownership of the property.
The buyer also pays any closing costs and escrow payments. These documents include:
The Settlement statement;
Final Truth in Lending Act statement;
Mortgage note stating the buyer's promise to repay the loan amount;
Mortgage or deed of trust securing the mortgage note;
And any additional documents required by the lender.

Documents at the Closing

Documents that you will receive in almost all real estate settlements.
From October 3, 2015, two new forms will be used and provided to the homebuyer. The new forms, the Loan Estimate and Closing Disclosure, both created by the Consumer Financial Protection Bureau are designed to help consumers.
Here are the most common and standardized documents that you may receive when you close:

Loan Estimate

The CFPB’s new Loan Estimate form helps borrowers understand the full cost of the mortgage, including fees and interest. It provides a summary of key loan terms and estimates of loan and closing costs. The new form replaces the initial Truth in Lending (TIL) statement and the Good Faith Estimate (GFE) and must be provided to the consumer 3 business days after the submission of the loan application.

Closing Disclosure (CD)

The CFPB’s new Closing Disclosure form helps borrowers know what to expect on closing day and how much money they’ll need to bring to the table. The form provides details about the loan terms as well as an accounting of transaction funds. It replaces the final Truth in Lending (TIL) and HUD-1 forms and must be received by the consumers 3 business days prior to their closing.

TILA-RESPA Integrated Disclosure Guide Book

The focus of this guide, published by the CFPB, is to provide the instructions for completing the Loan Estimate and Closing Disclosure. It also highlights common situations that may arise when completing the Loan Estimate and Closing Disclosure.

Note

Details the terms of the loan you are receiving, including the amount you are borrowing, the term of the loan in years, the interest rate, the amount of your payment, due dates and late fees, and other key terms.

Deed of Trust

These documents (if applicable) would be recorded on the land records to provide security/collateral for your loan.

Settlement Statement

The document that provides an itemized listing of the charges to be paid at closing. The totals at the bottom of the HUD-1 Statement determine the seller's net proceeds from the sale and the amount of the buyer's payment at closing.

Good Faith Estimate

A form that must be provided within three days of a consumer's application for a mortgage loan that details estimated fees and costs for your transaction. While this is a form that is provided prior to closing, it is important to have your GFE with you at the closing table.

Truth in Lending Disclosure

A document that must be provided by your lender that contains information regarding the annual percentage rate, finance charges, amount financed, payment schedule, total of your mortgage payments, credit insurance, late fees, and any pre-payment fees. A preliminary copy must be provided within three days of your loan application and a final version must be provided at closing.

Right to Cancel/Right of Rescission

(Not Relevant to Purchase or Investment Property Transactions)

A document that must be provided for any loan secured by a consumer's principal residence that gives the borrower three business days to cancel the loan transaction for any reason without cost.

Questions to Ask Before Choosing a Settlement Company/Agent

When you appoint a settlement company/agent, you’re choosing someone who will be in charge of one of your most important transactions (if not your most important transaction), ever.

Therefore, your settlement agent needs to be an agency you can trust.

Here are essential questions you should be asking your settlement agent before entrusting them with such an important transaction:

Communication

Without regular communication, agents may miss important details that will jeopardize your settlement.

The right settlement agent will regularly contact you, your real estate agent, all other involved parties, and the settlement agent acting for the other parties instead of making assumptions.

Quality vs Quantity

Every property transaction is unique, so don’t choose a settlement agent that will treat you as a number. The property involved, the terms of the contract, and your personal situation are always going to be slightly different from the next person. You need a settlement agent who asks you the right questions about your unique situation.

Even the best agents make mistakes when they’re dealing with too many files. That’s why the agents at Sakson Settlements never take on more than they can handle – we’re all about quality, not quantity.

For a better working knowledge of the ins and outs of the settlement process, use a licensed, bonded, and experienced settlement agent. Sakson Settlements and our agents are licensed, experienced, bonded and serving since 1989. At Sakson Settlements, we know residential and commercial settlements.

Fees

When it comes to the most important transaction you’ll ever make, there are many more considerations than just money. But naturally, fees remain a big consideration for many buyers and sellers.

We not only provide the best service to ensure value for money – we also make fees uncomplicated.