The Closing Process
What is a title?
When you purchase a home, you are really
purchasing the title to the property – which
is the right to occupy and use the space.
That title may be contested based upon past
rights and claims asserted by others. These
types of claims can infringe upon your
purchase of the property or cause you to
Why do you need title insurance?
A home is usually the largest
single investment any of us will ever make.
Title insurance protects against loss of
value from hazards and defects that may
exist in the title. These hazards include
fraud, forged signatures on deeds, unknown
property heirs, liens, and documentation
errors. If you were uninsured and your right
to title is challenged, you could lose
significant money defending yourself or you
could lose your home. Your mortgage lender
will require a loan policy of title
insurance to protect their interest in the
value of your property and a homeowner
should purchase an owner’s policy for the
very same reason.
How does title insurance protect
An owner’s policy of title
insurance requires the insurance provider to
pay for defending against any lawsuit
attacking your title as insured, and will
either clear up title problems or pay the
insured's losses. For a one-time premium
generally paid at closing, an owner's title
insurance policy remains in effect as long
as you, or your heirs, retain an interest in
What is a closing?
Closing, which is also known as
"settlement" or "escrow," is the event where
the title to a property is transferred from
seller to buyer. Closing is typically held
in an office, such as that of an attorney,
title agent or title insurance company, and
involves the completion of all the necessary
paperwork to finalize the agreement between
buyer and seller. In addition, all financial
issues are settled at closing – closing
costs - and once the title is successfully
transferred, the necessary documents are
prepared, signed, and filed with local
What are closing costs?
Closing costs are all costs
required to close the real estate
transaction. They can include (but are not
limited to) surveying fees, property taxes,
title insurance, attorney fees, agent fees,
points, loan origination fees, primary
mortgage insurance (PMI), and the balance of
your down payment. Prior to closing, you
should review your final closing statement
or HUD-1 Statement (whichever is in use) to
ensure that all the calculations are correct
and that you have been given all the credit
for deposits and other agreed upon buyer and
seller credits. Also recheck all lender,
title, and escrow fees to make sure they are
Why does your lender require
title insurance during refinancing?
From the lender’s standpoint, a
refinanced mortgage is actually a brand new
mortgage – complete with the same risks that
may have been present originally. During the
refinance process, your original mortgage is
paid off – and your existing lender’s title
insurance policy is rendered null and void.
However, if you purchased an owner’s policy
of title insurance at your original closing
– that policy will remain in effect as long
as you or your heirs own the property.
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