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Learn About Closing Terminology

Understanding home closing terminologies is crucial for anyone involved in the process of buying or selling a property

An analysis of the transfer of title to a piece of property over the years.

A title that is free of liens or legal questions as to the ownership of the property.

A meeting where all of the documents are signed and money changes hands.

Closing costs are separated into what are called “non-recurring closing costs” and “prepaid items.” Non-recurring closing costs are any items which are paid just once as a result of buying the property or obtaining a loan. Prepaid items recur over time, such as property taxes and homeowners insurance. A lender makes an attempt to estimate the amount of non-recurring closing costs and prepaid items on the Good Faith Estimate, which they must issue to the borrower within three days of receiving a home loan application.

Any conditions revealed by a title search that adversely affect the title to real estate. Usually, clouds on title cannot be removed except by deed, release or court action.

The legal document conveying title to a property.

Short for “deed in lieu of foreclosure,” this conveys title to the lender when the borrower is in default and wants to avoid foreclosure. The lender may or may not cease foreclosure activities if a borrower asks to provide a deed-in-lieu. Regardless of whether the lender accepts the deed-in-lieu, the avoidance and non-repayment of debt will most likely show on a credit history. What a deed-in-lieu may prevent is having the documents preparatory to a foreclosure being recorded and becoming a matter of public record.

A right-of-way giving persons other than the owner access to or over a property.

The right of a governance to take private property for public use upon payment of its fair market value. Eminent domain is the basis for condemnation proceedings.

An improvement that intrudes illegally on another person’s property.

Anything that affects or limits the simple title to a property, such as mortgages, leases, easements or restrictions.

Extra money held in an impound account for the payment of items like property taxes and homeowners insurance when they become due. The lender pays them with your money instead of you paying them yourself.

The report on the title of a property from the public records or an abstract of the title.

A document that provides an itemized listing of the funds that were paid at closing. Items that appear on the statement include real estate commissions, loan fees, points, and initial escrow accounts. Each type of expense goes on a specific numbered line on the sheet. The total at the bottom of the HUD-1 statement defines the seller’s net proceeds and the buyer’s net payment at closing. The HUD-1 is also known as the “closing statement” or settlement sheet.”

Individuals who will have legal ownership in the property are considered “on title” and will sign the mortgage and other documents.

Mortgage application loan agreement and house key
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