Understanding Closing Costs

July 7, 2017

Before buying or selling a home, it is important to know and understand all of the costs that are required at closing. Many settlement companies have gone to a flat fee for all purchase and refinance clients. This fee varies per company and geographical location, but here is an idea of the key services it may include.

Document Processing: The settlement company coordinates all elements of the transaction from the receipt of sales contract to closing. During this process, they order a title exam, resolve any title issues, coordinate the seller payoff, prepare the title commitment, schedule the closing with the lender, prepare the deed with a local attorney, obtain lender’s documents and prepare the final Closing Disclosure (if applicable) and ALTA Settlement Statement.

Title Exam: A detailed search or abstract of the local title records is conducted to determine the “chain of title” and recorded liens, which are examined and reviewed to determine insurability. During the title exam, a settlement company helps resolve any issues or inconsistencies before the property can be sold.

Title Binder: While this document is not the title insurance policy, it is an issued commitment to provide future title insurance on the property you are purchasing. It states the coverage that is going to be provided, and it lists any exceptions and requirements to be met prior to issuing a title policy.

While title insurance is not included in the closing costs, it is an essential piece of the settlement process. You can learn more about protecting yourself and your home here.

Closing: The attorney or licensed settlement agent conducts the closing for the buyer and seller. During closing, they explain all the documents and answer any questions you may have. They also notarize all signatures – a requirement, ensuring all settlement documents are valid.

Mailing: All documents, including the deed and the deed of trust executed at settlement, are mailed to the county courthouse for filing with the land records, and executed mortgage documents have to be sent back to the lender.

Document Archiving: Many settlement companies archive the transaction documents by electronically warehousing them.

If you have questions about closing costs, feel free to contact one of our title partners.