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Apollo Properties |
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Seller Services |
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Buyer Services |
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UTAH MLS Systems |
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Role of the Title Company Now that you've found the home you want to buy, what happens between now and the time you legally own it? The next step is to obtain title for the property from the title company. A title gives the owner the right to possess and use the property. But before receiving title, the you will need to have completed the following: Purchase contract: In order to purchase a property in the state of Utah you need to have a written contract between you and the seller. This agreement lays out the terms of sale. Purchase price, contingencies, closing date, earnest money deposit etc... A copy of this signed contract is given to the Title Company and they in turn work from the provisions in the agreement to finalize the transaction. This is called opening escrow. Earnest money: To show the seller and his agent you are a serious buyer, you will be asked to give a deposit called earnest money. If the sale goes through, the earnest money is applied toward the down payment. If the sale falls through, the earnest money may or may not be given back based on the terms of the purchase agreement. In some cases the earnest money is non-refundable. Title search: A title search is a thorough check of the records concerning the property. It is performed to verify the sellers right to change ownership. A title search will uncover any demands, faults, liens and other privileges or restrictions on the property. Document preparation: Appropriate forms are prepared for settlement. Settlement: Many events happen during settlement. The seller signs the deed, the buyer signs the new mortgage, the old loan is paid off and the new loan is established. The seller, real estate professionals, attorneys, surveyors and others performing services for the parties are paid. Title insurance policies are then delivered to the buyer and their lender. Why do I need title insurance? Owning real estate is one of the most precious values of freedom in this country. Get the assurance that the property you are buying will be yours. Other than your mortgage holder, no one else should have any claims or restrictions against your home. Title insurance eliminates any risks and losses caused by faults in title from an event that occurred before you owned the property. How does title insurance differ from other types of insurance? Title insurance is different from other types of insurance in that it protects you, the insured, from a loss that may occur from matters or faults from the past. Other types of insurance such as auto, life or health cover you against losses that may occur in the future. Title insurance does not protect against any future faults. Another difference is that you pay a one-time premium. A title insurance policy will protect you from risks or undiscovered interests. There are two principal forms of title insurance: The lender's policy The homeowners policy What is a lenders policy? A lenders policy protects the mortgage holder. If there is a fault in title that results in a loss, the mortgage holder will be paid back. What is a homeowners policy? A homeowners policy protects you, the purchaser, against a loss that may occur from a fault in your ownership or interest you have in the property. You should protect the equity in your home with a title policy. What does a homeowners policy provide? 1. Protection from financial loss due to demands that may be charged against the title to your home, up to the cost of the title policy. 2. Payment of legal costs if the title insurer has to defend your title against a covered claim. 3. Payment of successful claims against the title to your home covered by the policy, up to the cost of the policy. Does a title policy expire? Once purchased, title insurance remains in effect for as long as you own your property. Title insurance adds security and peace of mind to homeownership. How do I obtain title insurance and what does it cost? Let the title company, attorney or agent handling the closing of your property know that you want to purchase an Owner's Title Insurance Policy. When choosing a title insurer, look for a company with experience, as well as the financial strength to protect you. In most states, the insurance commission or some other governmental body controls the premiums for title insurance policies. You only pay the premium once. The cost depends upon the purchase price of the property, and your policy amount must be equal to the purchase price. What is an escrow? An escrow is deposit of funds, a deed or other instrument by one party for the delivery to another party upon completion of a specific condition or event. It is an independent neutral account by which the interests of all parties to the transaction are protected. When opening an escrow, the buyer and seller of the property establish terms and conditions for the transfer of ownership of that property. These terms and conditions are given to a third, impartial party known as the escrow officer. The escrow officer has the responsibility of seeing that the terms are carried out. How does the escrow process work? The buyer, seller, lender and/or borrower arrange escrow instructions to be created, signed and delivered to the escrow officer. The escrow officer will then process the escrow, in accordance with the escrow instructions. When all conditions required in the escrow are met, the escrow is closed. The escrow officer acts for both parties and protects the interests of each within the power of the escrow instructions. Escrow cannot be closed until the instructions have been fully satisfied and all parties have signed escrow documents. The escrow officer takes instructions based on the terms of the purchase agreement and the lenders requirements. The duties of the escrow officer include: Manage the funds and/or documents as instructed Pay all bills as authorized Assist the principals as needed Closing the escrow upon completion of instruction Distribute the funds How do I open an escrow? Generally, the sellers real estate agent will open the escrow. If there is not an agent involved you can simply take your completed purchase agreement with the earnest money to a title company. What do I bring to closing? All parties signing the documents must bring proper identification. Bring either a valid drivers license or state identification card to the title company. This item is needed to verify your identity by a notary public. What makes-up closing costs? There may be closing costs customary or unique to a certain locality, but closing costs are usually made up of the following: Attorney's or escrow fees (yours and your lender's if applicable) Property taxes (to cover tax period to date) Interest (paid from date of closing to 30 days before first monthly payment) Loan origination fee (covers lender's administrative costs) Recording fees Survey fee First premium of mortgage insurance (if applicable) Title insurance (yours and your lender's) Loan discount points First payment to escrow account for future real estate taxes and insurance Paid receipt for homeowner's insurance policy Any document preparation fees What can I expect to happen on closing day? You'll present your paid homeowner's insurance policy or a binder and receipt showing that the premium has been paid. The closing agent will then list the money you owe the seller (remainder of down payment, prepaid taxes, etc.) and then the money the seller owes you (unpaid taxes and prepaid rent, if applicable). The seller will provide proofs of any inspection, warranties, etc. Once you're sure you understand all the documentation, you'll sign the mortgage, agreeing that if you don't make payments the lender is entitled to sell your property and apply the sale price against the amount you owe plus expenses. You'll also sign a mortgage note, promising to repay the loan. The seller will give you the title to the house in the form of a signed deed. You'll pay the lender's agent all closing costs and, in turn, he or she will provide you with a settlement statement of all the items for which you have paid. The deed and mortgage will then be recorded in the state Registry of Deeds, and you will be a homeowner. What do I get at closing? Settlement Statement, HUD-1 Form (itemizes services provided and the fees charged; it is filled out by the closing agent and must be given to you at or before closing) Truth-in-Lending Statement Mortgage Note Mortgage or Deed of Trust Binding Sales Contract Keys to your new home Do I need an attorney? An attorney is not required to buy or sell real estate. When transferring ownership of a property, without the services of a title company, you need an attorney. If buying a home frightens you, peace-of-mind, knowing you have an expert on your side is reason enough for hiring an attorney. Home Seller Tips Title Insurance Ask for a discount! When you purchased your home, part of your closing costs paid for a title insurance policy. Title insurance protects your investment in your home from hidden risks that can cause loss of title or create encumbrances on the property, such as: * Forged deeds, releases or wills * Mistakes in recording legal documents * Liens for unpaid estate, inheritance, income or gifted taxes * Fraud Most title companies offer a discount off the standard premiums charged on title insurance policies. The discounts can average 20 to 60% but vary from state to state and from one insurer to another. Discount rates are normally available only on refinancing, but in some areas they can be obtained on home sales when a title search was recently performed. This discount is called a reissue rate. Some policies restrict the eligibility period to obtain reissue discounts while others maintain strict rules of proof of insurance. State laws in most cases regulate these rules and discounts, so you should ask what rules apply to their specific situation. Wouldnt you like to save money on one of the most costly items connected with selling your home? It cant hurt to ask. Many insurance companies will not disclose the existence of reissue rate discounts. Make sure and ask for the reissue rate discount when buying, selling or refinancing. |
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