Welcome or Register
Back to Table of Contents

Closing and Title Costs

It’s the big day.

The day you go to the title or escrow company, sign your name on the dotted line, hand over a check and prepare to take ownership of your new home.

It’s also the day that you and the seller will pay “closing” or settlement costs, an accumulation of separate charges paid to different entities for the professional services associated with the buying and selling of real property.

It’s too often a day filled with uncertainty and stress.

To help you better understand this confusing subject, the Land Title Association has answered some of the questions most commonly asked about title, closing and closing costs.

What services will I be paying for when I pay closing costs?

You will usually be paying for such things as real estate commissions, appraisal fees, loan fees, escrow charges, advance payments such as property taxes and homeowner’s insurance, title insurance premiums, pest inspections and the like.

How much should I expect to pay in closing costs?

The amount you pay for closing costs will vary; however, when buying your home and obtaining a new loan, an estimate of your closing costs will be provided to you pursuant to the Real Estate Settlement Procedures Act after you submit your loan application. This disclosure provides you with a good faith estimate of what your closing costs will be in the real estate process. An itemized list of charges will be prepared when you close your transaction and take title to your new property.

Can I pay for my closing costs in installments?

No, and it is easy to understand why. Many different parties will have fulfilled their responsibilities and be awaiting payment upon closing. The title or escrow company will disburse money to those parties, pursuant to the escrow instructions, when funds are available.

Will I be allowed to write a personal check to cover my closing cost?

Your closing funds should be in the form of a cashier’s check, issued by an institution from the state of your purchase, made payable to the title company or escrow office in the amount requested. A personal check may delay the closing or may be unacceptable to the title or escrow company. An out-of-state check could also cause a delay in your closing due to possible delays in clearing the check.

How much can I expect to pay for Title Insurance?

This point is often misunderstood. Although the title company or escrow office usually serves as a meeting ground for closing the sale, only a small percentage of total closing fees are actually for title insurance protection.

Your title insurance premium may actually amount to less than one percent of the purchase price of your home, and less than ten percent of your total closing costs. The title policy is good for as long as you and your heirs own the property with the payment of only one premium.

Why are separate owner’s and lender’s title insurance policies issued?

Both you and your lender will want the security offered by title insurance.

Your home is an important purchase, and you will want to be certain your home is yours, all yours. Title insurance companies insure your rights and interests in order to protect you against claims.

Your lender is looking to insure the enforceability of their lien on your property and marketability. What is meant by “marketability”? Local lenders will originate a loan here, and, often, sell it to an out-of-state investor. This investor, who may never see the property, needs to know that he has a valid and enforceable lien. Title insurance is the way of making certain. Without a current title policy, the loan is essentially unmarketable.

What does my Title dollar pay for?

Title insurers, unlike property or casualty insurance companies, operate under the theory of risk elimination.

Risk elimination can only be accomplished after an intensive period of risk identification.

Title companies spend a high percentage of their operating revenue each year collecting, storing, maintaining and analyzing official records for information that affects title to real property. The issuance of a title insurance policy is highly labor-intensive. It is based upon the maintenance of a title “plant” or library of title records, in many cases dating back over a hundred years. Each day, recorded documents affecting real property are posted to these plants so that when a title search on a particular parcel is requested, the information is already organized for rapid and accurate retrieval.

Trained title experts are able, with the aid of their extensive title plants, to identify the rights others may have in your property, such as recorded liens, legal actions, disputed interests, rights of way or other encumbrances on your title. Before closing your transaction, you can seek to clear those encumbrances which you do not wish to assume.

The goal of title companies is to conduct such a thorough search and evaluation of public records that no claims will ever arise. Of course, this is impossible--we live in an imperfect world, where human error and changing legal interpretations make 100 percent risk elimination impossible. When claims do arise, title insurance companies have professional claims personnel to make sure that your property rights are protected pursuant to the terms of your policy.

To conclude, when you pay for your title insurance policy, you are paying for a team of professionals who have worked together to deliver you a title insurance policy which represents protection for your ownership of real property.

Who can I look for straight answers on Title, Closing, and closing costs?

Title or escrow company personnel are available to review and explain your title policy and your closing statement.

Article by CLTA

Back to Table of Contents
agent photo

Shawn Ramsey
Brokers Real Estate
1602 Forest Glen Ct.
Pantego, TX 76013
Office: 682-233-0224
Cell:    817-360-9045
Email: sramsey@dfwbre.com

Testimonials

"Shawn made buying my first home a breeze! He took the headache out of all the paperwork, the inspection process, and the endless search for the perfect house. In two weeks of working with him, we found exactly what we were looking for. He is knows the ins and outs of foreclosures. I'm thankful for the referral! " Jennifer Shoemaker
"Hey Shawn! I was just thinking about you today because I noticed it was the 23rd - its been 4 months since we've closed. I can't believe its already been that long. I don't know if I thanked you enough for everything you did for me and Josh. So, here's another "thank you." We were pretty clueless on the process because it was our first home purchase, and you made us feel so comfortable. We love our house! Our summer was sort of crazy, so we're still making it our "home." But its still wonderful even if I still have some boxes here and there. Anyways, I'll let you go because I know you're busy busy! Oh, thanks so much for the fridge! You saved us some money and shopping! Thanks again for everything!!" Julie Calahan
"We were relocating from Pennsylvania to Dallas and had a very short window in which to find a house. We selected online the houses we wanted to see prior to our arrival and Shawn arranged and mapped out three days worth of houses to view. By the time we left we had a house. While still in Pittsburgh Shawn helped us finalize our closing from a far and assisted us with finding numbers to utility companies and or anything we needed. We have moved every year for the past 5 years and this by far was the best experience yet!" Withheld
"Shawn was extremely helpful, efficient and organized. He respected our busy schedules, only requested necessary information and worked well with our schedules to assist us in finding the perfect home." Rick Ybarra
"It was a great experience. Shawn was an outstanding communicator and went above and beyond to make us feel comfortable throughout the process. He kept our best interest in mind at all times and made the purchase of our home the easiest real estate transaction we've ever had. Simply outstanding." Chris Hill
"He worked with me very well and explained how the purchase process works." Withheld
"I can't begin to tell you how FANTASTIC Shawn is! Shawn always had my best interests in mind. He never tried to force anything on me and ALWAYS told me when things weren't up to par. I grew to trust and value Shawn's opinions and expert knowledge of not only the real estate biz but also this neighborhood and the real estate market. I was totally terrified of buying a house by myself, but Shawn was there by my side from the beginning to the end and STILL called to check up on me after we closed. Explaining every step (over and over sometimes) and calming my fears... Shawn was great. Thanks for SUCH a great time Shawn. I'm almost sorry that we're done buying a house! :-) It's been a great pleasure working with you and getting to know you!" Brenda Schumacher
"There were difficult situations that popped up and Shawn was always knowledgeable and available at all times to solve the problem." Withheld
View All

ABR - Accredited Buyer RepresentativeEqual Housing OpportunityMLS membershipREALTOR® certificationYahoo® Real Estate Classifieds