The purchase of a home is one of the biggest investments most of us will make in our lives. When purchasing a home think of your title insurance as PEACE OF MIND. Title insurance is a means of protecting yourself from financial loss in the event that problems develop regarding the rights to ownership of your property. There may be hidden title defects that even the most careful title search will not reveal.
In addition to offering protection from financial loss, title insurance pays the cost of defending against any covered claim. Your lender will probably require you to obtain title insurance for their protection. The owner’s policy and the lender’s policy are two different policies. The lender’s policy only insures that the financial institution has a valid, enforceable lien on the property. Most lenders require this type of insurance, and typically require the borrower to pay for it. For a one-time premium, you, as well as the lender, can be protected. The owner’s policy is designed to protect you from title defects that existed prior to the issue date of your policy. Title troubles, such as improper estate proceedings or unsatisfied encumbrances, could put your equity at serious risk. If a valid claim is filed, your owner’s title policy covers financial loss up to the face amount of the policy. There are different types of owner’s policies available. Some enhanced owner’s policies provide protection from defects that occur after the issue date of your policy.
A closing is defined as “a meeting of all parties involved in a property transaction during which pertinent documents are signed and transferred, and funds are distributed.” Typically, it is handled by a closing agent, either a title insurance company or an attorney, and will last approximately 45 to 60 minutes.
The closing agent will begin preparation for your closing shortly after you sign your contract. A request for payoff information is sent for existing mortgages, as well as a request for any information regarding homeowners or condominium association dues and/or transfer fees. If a new mortgage is being obtained, the closing agent will work closely with the new lender to make sure that all of the lender’s closing requirements are met. A title exam is ordered to verify the seller’s right to transfer ownership, and to discover any outstanding mortgages, liens, restrictions, easements, etc., which may affect the property. A title commitment will then be issued to show any matters reflected in the title exam, as well as a determination of the documents needed to properly transfer the title of the property to the buyer. The closing agent will also work closely with the lender and Realtors to coordinate the ordering of the termite inspection, survey, homeowner’s insurance and flood insurance, if applicable.
When the lender has received all required documents from the buyer and the loan has been approved, the closing agent will schedule the date and time for the closing with all parties. The lender will prepare a closing package consisting of the loan closing instructions, fees charged in connection with the new loan, and any loan documents to be delivered to the closing agent. The closing agent (or licensed attorney, if needed) will then prepare all of the necessary closing documents, including a closing statement outlining all costs associated with the transfer of ownership, as well as fees charged in connection with the new loan. The buyer’s cash to close, if applicable, must be in the form of a wire transfer. The seller will also be advised of the proceeds of the sale of the property.
The closing typically takes place in the closing agent’s office. The closing agent, buyer, seller and any realtors sit around a table together while the closing agent explains the closing statement as well as other closing documents. When all of the documents have been signed, including the deed, and the closing agent has collected all funds, the seller receives his or her proceeds from the sale, if applicable. After the closing, the closing agent sends the original deed and mortgage to the courthouse for recording. The completed loan package is sent to the lender. All remaining funds are disbursed according to the settlement statement, including mortgage payoffs. The owner’s and lender’s title policies are issued when the deed and mortgage are returned to the closing agent after recording.
STATE AND FEDERAL GOVERNMENT SITES
Alabama Department of Insurance http://www.aldoi.gov/Default.aspx
Alabama Department of Revenue http://revenue.alabama.gov/advalorem/countyoffices/
Alabama Secretary of State http://www.sos.alabama.gov/
State of Alabama http://www.alabama.gov/
Tennessee Department of Commerce and Insurance https://www.tn.gov/commerce
Tennessee Department of Revenue https://www.tn.gov/revenue
Tennessee Secretary of State https://sos.tn.gov
State of Tennessee https://www.tn.gov
Department of Housing & Urban Development http://portal.hud.gov/hudportal/HUD
Consumer Financial Protection Bureau http://www.consumerfinance.gov/
Internal Revenue Service http://www.irs.gov/
VA Home Loan Program http://www.benefits.va.gov/homeloans/
INDUSTRY GROUPS & ASSOCIATIONS
First American Title Insurance Company http://www.firstam.com/title/al/
Stewart Title Guaranty Company www.stewart.com/alabama
WFG National Title Insurance Company https://national.wfgnationaltitle.com
American Land Title Association http://www.alta.org/
Southeast Land Title Association http://www. sltaonline.net/
National Association of Credit Union Service Organizations https://www.nacuso.org/
TITLE INDUSTRY PUBLICATIONS & RESOURCES
National Mortgage News http://www.nationalmortgagenews.com/
The Legal Description http://www.thelegaldescription.com/TLD/thelegaldescription.aspx
The Title Report http://www.thetitlereport.com/TTR/thetitlereport.aspx
ALTA Homeclosing 101 http://www.homeclosing101.org/links.cfm
Fannie Mae – Know Your Options http://knowyouroptions.com/
Moving Resources http://www.moving.com/
CFPB Know Before You Owe https://www.consumerfinance.gov/know-before-you-owe/