Selecting Title Insurance
Do I have a choice in selecting title insurance for my transaction?
Yes. MBH Settlement Group now offers the Advantage Policy
for Owner's and Lender's title insurance. The Advantage policy offers expanded coverage beyond the standard ALTA 1992 policy. Speak with your MBH Settlement Agent for additional details.
Owner's Title Insurance
If my lender requires that I purchase Lender's title coverage, then why do I need an Owner's title insurance policy?
Purchasers often ask why they need an Owner's title insurance policy when the Lender's policy should be enough. The Lender's Policy only protects the Lender, and only for the life of the loan, consequently the policy expires when the loan is paid off. Conversely, the Owner's policy protects the Purchaser's interest in the property he receives, and that coverage continues for his lifetime. This is important because liability for title defects can survive through and even beyond the period of the Purchaser's ownership. Therefore, for a one-time premium paid at the time of settlement, the Purchaser is protected against prior title defects, or claims made against his title, even after he sells the property or pays off the loan. We strongly recommend that Purchasers obtain their own title insurance policy to protect themselves as Lenders do.
Can I have my closing funds wired to your account? Do you have wiring instructions?
MBH will accept wired funds. These funds MUST be received by MBH prior to closing. The closing cannot be finalized until all funds are received, which could conceivably delay delivery of the keys to your new home. We suggest that you arrange to have funds wired for arrival at MBH the day before closing. Please note that wired funds coming from someone other than a bank (such as a brokerage account) often require up to three (3) days prior notice to ensure that the wire gets sent out. Also, most companies that wire funds for you will require written authorization before sending the wire out. Be sure to contact your bank or brokerage well ahead of time to make the necessary arrangements.
Can you wire my proceeds to my bank, money market or stock account? If so, what do you need?
If MBH is given written wire instructions directly from our client, we will wire funds to your account; we cannot accept verbal wire instructions or instructions received through e-mail. Normally your funds will be wired to your bank within two business days after your closing. Please note that many banks do not actually credit your account with these funds until the day after the bank receives the wire. If we are to wire directly into a regular bank checking account, your wire information is normally shown on the face of your checks. If we are to wire to a brokerage or similar account, the wire instructions are more detailed and should be supplied by your brokerage firm. Normally, such institutions will provide their wire information with your account name and account number to you, upon your request.
Power of Attorney
Can I use a power of attorney (POA) for my closing?
Yes, but you should review the following carefully:
- Any POA must be reviewed and pre-approved by (i) MBH and, IF you are the purchaser, (ii) by your lender(s).
- The review of the POA should be done as soon as possible in case the existing POA is not acceptable, prompting the need for a new POA to be drafted and circulated prior to closing.
- The pre-approved ORIGINAL POA MUST be delivered to MBH at or before closing, as we must present the original POA at the courthouse for recordation.
- A Special POA for the specific transaction is normally required in order to satisfy the title company insuring the transaction.
- If a General POA is pre-approved by MBH for the transaction, we must collect and keep the ORIGINAL POA to be recorded at the courthouse. The original will be returned to you after recording at the courthouse, which may take a few weeks.
- Please be sure that MBH has contact information for the person who will sign for you and be sure that person will attend closing. Also, it is wise to give MBH and the person signing for you a phone and fax number to reach you during closing for any last minute issues.
- If you are the seller, be sure your agent or the person signing for you has the keys, garage door openers, any money due from you, etc., to deliver at closing.
- If you are the purchaser, be sure you make arrangements to have your purchase money delivered to MBH at or before closing. Checks are to be made payable to MBH and must be a cashier, certified or teller check. Wired funds should be wired for arrival at MBH the day before closing; please note that wired funds coming from some source other than a bank (such as a brokerage account) often require three (3) days prior notice. MBH should be informed of any wire expected to be sent to us and the wire should contain a reference to your specific case.
Scheduling a Closing
Should I schedule my closing before the end of the year for tax reasons?
If you have the opportunity to schedule your closing on either side of New Year's Day, you should carefully consider your individual financial and tax situation. If you schedule it on or before December 31, and you pay your points and prepay your first mortgage payment, you may be able to deduct all of these costs on your tax return for the year of the closing. As always, consult with your tax or accounting professional.
Why do I need a property survey?
Your lender may require a survey of the property that you plan to purchase. This is done to confirm that the property's boundaries are as described in the sales contract. The title insurance company may, in certain circumstances, also require a current survey.
Other Types of Insurance
What other types of insurance will I need?
Your lender will require that you purchase homeowner's or hazard insurance, which protects you and the lender from loss in the event that the house is damaged or destroyed, such as by fire. Generally, coverage must be equal to at least the replacement costs of the property. Most home buyers purchase a homeowner's package of insurance that includes coverage for personal liability (which covers you if someone is injured on your property), personal property coverage (which covers loss and damage to personal property due to theft and other events), and dwelling coverage (which covers you for fire, theft, water damage and other hazards to your actual house). If you live near a body of water, you may also want to get flood insurance as part of your homeowner's protection. Lenders typically want the first year's premium to be paid at or before closing. Your lender may add the insurance cost to your monthly mortgage payments and keep this portion of your payments in a reserve called an escrow account, paying your insurance premiums when due each year out of the account. We encourage you to discuss any questions about required or recommended insurance with your lender.
Can the seller credit the buyer for home inspection items?
Some lenders will allow credits for home inspection items, but in most cases the lender will want to simply give a closing credit for the amount of the item(s). For a lender to allow credits for specific home inspection items is somewhat inconsistent with the lender's appraisal which generally states that the home is in good condition and good repair.
What if the seller credit exceeds the amount of closing costs?
When it comes to seller credits, different lenders will allow different credits to be shown, but lenders will generally not allow seller credits that exceed the amount of closing costs.
Pre-paid Seller Credit
Why can't 'pre-paids' be a part of the seller credit on all loans?
Some lenders allow 'pre-paids' and some do not; we advise you to check with your lender directly. In general, even lenders who allow them will only allow them up to the dollar amount of closing costs, not over.
Why does the lender have to have a new title insurance policy every time I do a transaction?
Lender's title insurance policies insure the lender's interest in the property up to the face amount of their loan. The policy is only applicable to the specific transaction, and it provides coverage for the mortgage lien and it protects against errors made in the title search connected with that transaction, as well as any pre-existing clouds on title. Therefore, each new lender will want a lender's policy that is specific to their transaction.
Why can't the sales proceeds or the commission check be disbursed at the table?
State statutes prohibit us from disbursing funds from the transaction until after all title documents (deeds or deeds of trust) have been recorded in the local Land Records. Recordation is not accomplished until such time as the settlement is complete, in other words, until all required funds are received by MBH for the transaction, and all documents are executed by the parties according to the lender's instructions. Once settlement is complete, the title documents will be sent for recordation, and upon verification, we are permitted to disburse funds. The recordation process can be time consuming, and it varies from jurisdiction to jurisdiction. Additionally, the recordation of documents from settlements conducted at the end of the month or during the holidays may take significantly longer due to volume.
Getting Your Proceeds
How do we get our proceeds?
Once we have verified that all necessary title documents have been recorded, proceeds can be mailed or picked up in check form. We do not issue certified checks. If the payee wishes to have the funds immediately available, we recommend a wire transfer.
What to Bring to Closing
What do I need to bring to closing?
You will need to bring a driver’s license or other government-issued photo identification, your original hazard insurance policy and a check for any amounts due.
Paying Settlement Funds
Can I write personal check for my settlement funds due?
No, all funds must be in the form of a certified check or cashier’s check payable to MBH Settlement Group.
Good Faith Estimate
How much money do I bring if a final Closing Disclosure or HUD-1 settlement statement is not available prior to closing?
You should bring a cashier’s or certified check for the amount listed on the Loan Estimate provided by your mortgage loan officer. If the Loan Estimate is an overestimate, we will provide you a refund at settlement. If the Loan Estimate is an underestimate, in most cases we will accept your personal check for the difference.
How Long is a Settlement
How long will settlement last?
Our settlements typically last about one hour.
My last statement says that I owe $245,768.98. Why are you collecting $247,045.56 for my loan payoff?
The mortgage lender collects interest on its loan until it RECEIVES the payoff check. If you close on Thursday, record on Friday, FedEx on Friday evening, the BEST case scenario is that the payoff lender receives its check on the following Monday. The more likely scenario is that it is received the following Tuesday. Because of weekends, holidays and unforeseen delays, MBH calculates interest on the payoff through the 7th day after settlement (10 days on a refinancing because of the three day right of rescission). If the amount collected exceeds the amount due on the day the lender receives the check, they will refund the excess interest along with any escrowed funds directly to the seller or borrower (this usually happens about three weeks after settlement). We FedEx all payoffs so that they may be tracked for delivery.
A special note on FHA loans: FHA loans do NOT carry per diem interest. This means that if you close on the 30th of December, and your payoff is received on the 5th of January (impacted by the weekends and/or holidays) then you have to pay ALL of January’s interest, not a pro-rated amount. If you close after the 25th day of the month and you have an FHA payoff, you can expect to pay extra interest on the entire next month.