1. Whoever pays for the title insurance gets to select the settlement company.  In Virginia, the buyer pays for the insurance and names the title company in the contract.

  1. The settlement agent is a neutral party who does not represent either side of the transaction. You have the right to hire an attorney to represent you at settlement.

  1. Understand your loan product BEFORE you go to settlement. Loan documents cannot be changed at settlement. Basically, if you want the money to buy the house you must sign the lender’s paperwork.

  1. Listen to the advice of the professionals you have

   selected to assist you with the home buying process. 

A few things to remember...

Settlement also called a “Closing” is a meeting that usually involves the buyer, the seller, their respective real estate agents and a settlement agent.  The purpose of the meeting is to finalize the documents necessary to transfer ownership of real estate and finalize the purchase money loan(s). 

Settlement Agent works with both buyer and seller in the transaction.  S/he researches the title to make sure there aren’t any liens on the property; reports the condition of the title to the lender in the form of a binder;  prepares the HUD 1 Settlement Statement with information gathered from a variety of sources; conducts settlement by explaining all documents and witnessing necessary signatures; pays the seller, the old lender and any other payees named on the HUD 1; records the deed and deed of trust at the appropriate Courthouse.  A Settlement Agent must be a registered Title Insurance Agent, Real Estate Broker or Attorney who is certified by the Consumer Real Estate Protection Act (CRESPA) to conduct settlements.

HUD 1 Settlement Statement includes all financial details of the purchase or refinance.  Page 3 of the new HUD also includes a summary of the terms of the loan and a comparison of the fees quoted by the lender on their Good Faith Estimate (GFE) and the final numbers on the HUD 1. 

Note the Promissory Note is the buyer’s pledge to repay the loan which is being closed at settlement.  The Note is prepared by the lender and delivered to the Settlement Agent along with other loan documents.

Deed of Trust is the “Security Instrument” or buyer’s commitment of real property as collateral to secure the Note.  It names a “Trustee” who has the authority to take the property back (foreclose) if the borrower does not perform under the Note.  The Deed of Trust is prepared by the lender and delivered to the Settlement Agent along with other loan documents.  The Deed of Trust is recorded at the appropriate Courthouse to give public notice that there is a lien against the real estate.

Deed is signed by the Seller and conveys ownership and specifies how title will be vested in the new owner(s).  The Deed is recorded at the appropriate Courthouse to give public notice that ownership of the real estate has transferred to the Buyer(s). 

Truth in Lending Statement is a Federal disclosure regarding the terms of the loan, including APR, total interest paid, total dollars paid, late fees, etc.

Title Insurance is the least expensive insurance you will ever buy to protect your most expensive investment.  It protects the homebuyer against events that occurred in the past but are not evident at the time of purchase.  Examples are forgeries, unknown heirs, improper recordings and incorrect notary acknowledgments.  The underwriter will pay to defend your title if necessary.  There are two types of title insurance… owner’s and lender’s.

Owner’s Title Insurance is issued to the buyers at settlement and protects the buyers as long as they or their heirs own the property.  There is a single premium paid at settlement, no renewal is required.  You may waive the option to purchase an owner’s title insurance policy but once waived, you can’t change your mind.

Lender’s Title Insurance is issued to the lender but paid for by the buyer as a condition of the loan.  This policy lasts as long as there is a principle balance remaining on the loan. 

Home Warranty is a maintenance protection plan that covers the cost of home repairs, less a deductible.  Usually includes HVAC systems, plumbing, electrical, roof and appliances.  A good investment when the real estate is older or when testing a system is not possible prior to settlement such as central air conditioning in the winter.  Often paid by the seller as an incentive.

Survey usually not required by either lender or title underwriter BUT a very wise investment.  Surveys will disclose situations that may not otherwise be apparent such as an easement or neighbor encroachment.

5315 Lee Highway Arlington VA 22207    703.531.1088 phone    703.531.1099 fax