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The Closing (Settlement) Process

Whether you're purchasing your first home or your fifth, the day of closing should be a time of celebration. While you're busy packing, ordering phone service and scheduling movers, it's comforting to know that skilled professionals are busy working behind the scenes to make sure your closing runs smoothly.

Your first look at the settlement process may be on the day of closing, but the process itself begins much earlier. Once an order is received, the countdown to closing begins. Timing is essential, to make sure all the ingredients for a successful closing are in place for your arrival.

When the contract or escrow agreement is received, one of our highly skilled settlement agents will review it for completeness and accuracy. If an earnest money or deposit check is received, your settlement agent will see that it is promptly deposited into an escrow account, where the funds will remain until the time of closing.

One of the first things your settlement agent does, upon receipt of an order, is to request preliminary title work. Security Search & Abstract Company, Inc. will search and examine the title and prepare a title commitment or other form of title evidence.

Upon receipt of the title commitment, your settlement agent checks the information for completeness and accuracy and makes note of any requirements which must be satisfied. He or she then compares the commitment to other documents, such as the contract and loan closing instructions, making sure all information is consistent.

While the title evidence is being prepared, your settlement agent is busy coordinating other matters. If the contract calls for a prior mortgage to be paid off, the agent will order payoff figures from the existing lender. If the buyer is assuming the loan, an assumption package will be ordered showing the current status of the loan.

While each closing is as unique as the people attending it, much of the behind-the-scenes work leading up to the closing is fairly commonplace for the skilled professionals performing it. Your settlement agent brings any problems or discrepancies which may be discovered to the attention of the appropriate parties so that they can be corrected, before settlement. It is his or her job to facilitate cooperation, coordination and compliance between all the parties involved with the transaction.

Once the preliminary work is complete and all information on the contract, loan closing documents and title commitment has been compared and complied with, your settlement agent is ready to prepare the HUD-1 Settlement Statement.

All costs must be shown on the HUD-1. This includes costs paid at closing as well as pre-paid costs, such as earnest money deposit or loan application fee. If you are a buyer and are obtaining a loan to purchase residential property, your lender has three days from the time of the loan application to provide you with a Good Faith Estimate of your loan costs. Within those three days you should also receive a copy of the HUD-1 Booklet, "Buying Your Home," which outlines the settlement process.

As closing day approaches, your settlement agent orders any updated information which might be required. Once satisfied that the paperwork is in order, he or she confirms the date, time and location of the closing with all the parties involved.