The Settlement Process
1. When and where do I go to settlement?
With First Guardian Title & Escrow your settlement can be held at one of our conveniently located offices in Lake Ridge, Stafford, or Tyson’s Corner. For those customers who need a more flexible option, we also offer a mobile closing option. With this option, we will bring the closing to you at your office, the real estate agent’s office, the lender’s office, or other remote location and can be done after- hours.
2. Who attends settlement?
All involved parties attend settlement. This typically includes the buyers and sellers along with the real estate agents and settlement agent.
3. How long does settlement take?
Depending on the type of transaction, the settlement for a purchase closing takes one to two hours to complete, while a refinance usually takes half an hour to an hour.
4. Would we bring to settlement?
You will need to bring a photo ID and wire or cashier’s check for the estimated closing costs.
5. Will all title research be done prior to settlement?
Yes. First Guardian Title and Escrow will do an extensive title search as part of the settlement process and prior to issuing the Title Insurance policies.
6. Can we settle if there are outstanding defects on the property title?
No. All title defects must be corrected prior to settlement and prior to the Title Insurance policies being issued.
7. What is the Note?
A binding contract between the Lender and the Client to guarantee the repayment with a specified sum within a certain time.
8. What is the Deed?
A written instrument under seal for the conveyance of Real Estate.
9. What is the Deed of Trust?
A deed wherein legal title in real property is transferred to a trustee, which holds it as security for a loan (debt) between a borrower and lender.
What to Expect
Settlement, or Closing, is the meeting during which the sale of property is finalized. Buyers and Sellers come together to “pass the papers.” This means that all the parties sit around the table and sign the many documents required to complete the sale. At settlement, the title of the property, and thus the ownership, changes hands from the seller to the buyer through the signing of the Deed. While we refer to this final meeting as the “settlement or closing,” the process required to complete settlement actually begins the moment the sales contract is signed. Here is a quick summary of what to expect before, during and after settlement.
Once you have found the perfect home, and your offer has been accepted by the seller, the settlement process begins. And there is much to do before the actual real estate closing occurs!
The agents, lender, and settlement/title company each have a role in the settlement process. The agents are responsible for several tasks. First, the agents will send over a copy of the contract to the title company and lender so each of them can begin their part of the transaction. Then the agent will arrange to have the home inspected by a professional home inspector. The inspector will identify any areas of concern, point out issues and provide a written report. From this report, you can determine which things constitute major flaws and determine how best to deal with them. One of the agents, as set out in the contract, will also be responsible for ordering the termite inspection and providing that to the lender and title company. Sometimes buyers choose to also have a Radon Inspection, and if so, Selling Agent will order that. The agents will also coordinate the time and location of the closing with the title company and the Seller and Buyer.
On the day of settlement, both agents and the buyer will meet at the home to conduct a final walk-through of the property. The parties will make sure that all requested repairs were made and are satisfactory and the rest of the home is still in the same condition (or better) than it was at the time the contract was written.
The lender’s role in the process involves multiple steps to get the loan approved. First, the lender will “lock-in” your interest rate and have you sign the required disclosures. Next, they will order an appraisal of the property. Through this appraisal, they will confirm the actual value of the property. Once the title company’s commitment is received, the appraisal is finalized, and the borrowers’ disclosure documents are returned, then the entire loan package will be submitted to underwriting for approval. And while waiting for final approval, the lender will reach out to the title company to coordinate all the remaining details for closing.
While the agent and the lender are busy fulfilling the terms of the contract, the title company simultaneously works on their part of the process. One of the first requirements in their process includes extensive research on the title of the property. Upon review of the title search and clearing of any title problems, the title company issues the title commitment to the lender, which addresses all title requirements for closing. Additionally, the title company will also handle the behind-the-scenes communications between all parties involved by gathering all items outlined in the contract, such as the termite inspection. They will also order any payoffs, the survey, HOA/Condo Dues Information, and tax information.
Once everything is collected and then circulated to the lender, and the lender has received everything they need from the borrower, the lender will issue the closing instructions so that the title company can prepare the HUD-1 Settlement Statement (referred to as the HUD-1). The HUD-1 serves as the fee breakdown for all of the closing costs as outlined on the instructions and in the contract. In addition to preparing the HUD, the title company will also prepare the packet of title documents that the Seller and Buyer will sign, including the Deed. The title company will also prepare the Lender’s Documents for signing by the Buyer.
With everyone working together and First Guardian Title and Escrow on the team, settlement day should run smoothly and efficiently.
When settlement day finally arrives, all of the necessary parties will meet to finalize the transfer of property ownership through the signing of the Deed to finalize obtaining the loan through the signing of the loan documents, particularly the Note and Deed of Trust. This can be done at one of our offices or by making use of in-house or our mobile closing services. We also offer after-hours options to accommodate your schedule. Upon arriving at the meeting, you will present your identification for verification. After reviewing the HUD, then both the parties will sign the necessary documents. This is the “passing papers” element of the meeting. Once all documents are signed, the buyer will pay the necessary closing costs through the use of either a certified check or wire to cover the costs. Now that all the papers are signed and all money has changed hands, the buyer is provided all the keys to the property from the seller and can move into the property.
Within 48 hours of closing, the title company records the new Deed and Deed of Trust with the appropriate local Clerk’s Office. Once the documents are recorded, then the funds held in escrow are dispersed accordingly. When the recorded documents are returned to the Title Company, the title policies are issued to the Owner, along with the Deed, and to the Lender, along with the Deed of Trust.