When you finally find the perfect home for you and your family and the seller accepts your offer, you’re not quite across the finish line. There is still plenty of work to be done. For most homebuyers, the next move is to enlist the help of a settlement company.
Since buying a home isn’t something most people do every day, it’s not uncommon to not know what to expect from a settlement company. A settlement company essentially glues together the process of the sale, working with both you and the seller in the transaction – that means it is involved in a variety of activities involved in a closing.
There are four main categories of services that most settlement companies provide. Here’s a breakdown:
First and foremost, a settlement services firm will provide your title insurance, which you need in order to finalize the purchase. They’ll search the property title, issue your title insurance commitment, and work with the seller to make sure that you receive a clear title. It’s their responsibility to distribute your final title commitment to all parties, including your lender, the real estate agents and/or your attorney, if applicable.
Preparing for and attending closing
Then there are some things your settlement company may do to make the process go that much more smoothly for you. They will schedule the settlement, prepare and send out settlement notices. They should also attend the closing at the location of your choice and take the time to review and explain the title and lender documents to you.
When it comes down to the dollars and cents, your settlement company should help you in several ways. First, they should assist your lender in clearing mortgage conditions. They will also make sure deposits are received and credited at closing.
Your settlement company will prepare the ALTA Settlement Statement and assist your lender in preparing the Borrower's Closing Disclosure. They should review it with you prior to closing as well as at the closing. They will also disburse proceeds from the closing, assuring that all existing liens, judgments and real estate taxes are paid in full.
You don’t need to worry about legal jargon – your settlement company will help you with that. It’s their job to prepare the new deed conveying the property to you, the buyer. They will also record that brand new deed and mortgage, if applicable, with the appropriate county recorder of deeds.
Back in the day, you would leave the closing table with a full ream of paper of unsigned copies of all of the lender documents. Today, the better companies will provide you an electronic copy of all of the documents you sign at closing, usually via a secure email link. Next, they’ll issue the owner and lender title insurance policies along with the recorded deed and mortgage. They should also store an electronic copy of your documents in a secure location, just in case you need access to them in the future.
Purchasing a home can be very complex if you don’t do it every day, and a good settlement company will serve as your guide to ensure everything goes smoothly and that there aren’t any surprises.