Virginia Real Estate Settlement Services

7. Owner’s Title Insurance and Homeowners Insurance policies provide a record and proof of your coverage. The Owners Title Policy really is

the most important paperwork that you receive from your Closing.

If anyone ever challenges your ownership of the property, the Tile Company steps in and protects your interest. [Remeber the average Attorney Fee today to defend a Title starts at $50,000.00.] If you re-finance the property anytime during your ownership, you will never have to buy another Owner’s Policy, but the Re-fi Lender will require Title Coverage. By providing your Owner’s Title Policy to the Settlement Agent, the cost of the Lender Policy will be substantially reduced. Then, again, when you go to sell the property, if the new Buyer’s Title Search finds some issue, the Title Company steps in and indemifies your coverage.

6. Riders are amendments to the sales contract that affect your rights. For example, if you buy a condominium, you may have a rider outline the condo association’s rules and restrictions. You would want to keep your Homeowner’s Associaiton Package.

5. Affidavits swearing to various statements by either party. For example, the sellers will often sign an affidavit stating that they have not incurred any liens on the property.

4. The deed transfers ownership of the property to you.

3. The mortgage and the note (two pieces of paper) spell out the legal terms of your mortgage obligation and the agreed-upon repayment terms.

2. The Truth in Lending Statement summarizes the terms of your mortgage loan.

1. The Real Estate Settlement Procedures Act (RESPA) statement. This form, sometimes called a HUD 1 statement, itemizes all the costs associated with the closing. You’ll need this for income tax purposes and when you sell the home.

The lender must disclose a good faith estimate of all settlement costs. A check to cover your closing costs will probably have to be a cashier’s check. The title company or other entity conducting the closing will tell you the required amount for:

 Downpayment
 Loan origination fees
 Points, or loan discount fees, you pay to receive a lower interest rate
 Appraisal fee
 Credit report
 Private mortgage insurance premium
 Insurance escrow for homeowners insurance, if being paid as part of the mortgage
 Property tax escrow, if being paid as part of the mortgage. Lenders keep funds for taxes and insurance in escrow
accounts as they are paid with the mortgage, then pay the insurance or taxes for you.
 Deed recording tax fees and recording tax fees for the mortgage/Deed of Trust
 Title insurance policy premiums
 Survey
 Inspection fees—building inspection, termites, etc.
 Notary fees
 Prorations for your share of costs, such as utility bills, fuel oil in the tank, and property taxes

A Note About Prorations: Because such costs are usually paid on either a monthly or yearly basis, you might have to pay a bill for services used by the sellers before they moved. Proration is a way for the sellers to pay you back or for you to pay them for bills they may have paid in advance. For example, the gas company usually sends a bill each month for the gas used during the previous month. But assume you buy the home on the 6th of the month. You would owe the gas company for only the days from the 6th to the end for the month. The seller would owe for the first five days. The bill would be prorated for the number of days in the month, and then each person would be responsible for the days of his or her ownership.

11. All personal items of the sellers and all debris have been removed.

10. Instruction books and warranties on appliances and fixtures are there.