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The Closing Process
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Do
you feel as if you are walking on a tightrope when choosing a title
company? First and foremost, picking an "Investor friendly"
title company is crucial. "Investor friendly" means the
title company understands simultaneous closings or "flips".
Many do not understand the guidelines of "hard equity financing".
They have a tendency to assume that our requirements are handled
the same as a bank. We make it simple! Simple means we provide the
loan amount, all closing costs associated with your loan, and our
requirements the same day you provide us the title company information.
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Although
our loan processor is in contact with the title company every 4
days, you need to take an active role as well. Some investors make
the mistake of letting the real estate agent be the "go-to
person". BIG MISTAKE! You are the person purchasing the property;
you need to be the person making contact with the title agent. The
title agent may need to ask you personal information such as your
social security number or obtaining an identity affidavit. Do you
want anyone not related to you fielding those questions?
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You must submit
your accepted contract along with all contact numbers for both
yourself and the seller to both our company and the title company.
The contract sets forth the process of researching the history
of the property which is known as an "abstract search".
The search includes making sure that all mortgages have been satisfied
and to verify there are no existing liens on the property due
to a foreclosure, probate, unpaid utilities, property taxes and
code violations.
In addition,
you must submit the name of the insurance company who will be
providing your hazard insurance. Please provide the contact person,
phone and fax numbers. We contact the company directly to ensure
that the coverage amount and additional insured information is
correct. Please refer to our "INSURANCE
REQUIREMENTS" on our home page.
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Our requirements
are to do a lien search and contact the governing authority in which
the property is located to verify the property has no code violations
or code liens.
A
code violation search is another crucial part of the puzzle that
can not be overlooked. Code violations can vary from not having
a dog licensed, an automobile that has an expired tag/no tag, to
property demolition/unsafe structure. We can not close on any property
that has code violations and/or open permits. We strongly suggest
that once you have decided to purchase any property, take the time
and contact the governing authority yourself to ensure there are
not any last minute surprises.
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Once
the title company has the searches completed, they prepare the commitment.
The commitment is drafted in the name of your entity on your contract
and is sent to both our company and our attorney for review. The
commitment is used to prepare the loan documents. This process takes
2 days to review the commitment and prepare loan documents.
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The
other important item for all parties is the HUD-1. We require the
Hud-1 24 hours in advance for review and approval. After our approval,
the title company is then responsible for forwarding the HUD-1 to
you. We strongly suggest that you remain in contact with the title
company ensuring that you receive your final figures to bring to
closing.
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At
time of closing, the title company only accepts funds in the shape
of a BANK
CASHIERS
CHECK or as a WIRE. Funds can not be in the form
a personal check, money order or cash. Please refer to our "BORROWER
CHECKLIST" on the main menu to make certain you have the
correct items needed at time of closing.
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In
order to prepare the proper loan documents, we all must be in agreement
in choosing the closing date. The closing date is the date that
both you and the seller of the property have chosen to sign all
legal documents changing ownership from one party to another. At
time of closing, you will be signing the loan documents securing
your interest in the property. These mortgage documents will then
be sent to the county courthouse for recording
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| Although
the title agent conducts the closing, he/she does not have the knowledge
of our package. To help you understand our loan documents, we send
a closing representative. Her role is to explain the loan documents
and answer any questions you may have pertaining to your loan. |
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After
signing our loan documents, our representative will give you a copy
of all the loan documents along with an original HUD-1 and copy
of the title commitment. The payment letter is the first page of
your loan documents. This is the only reminder of your mortgage
payment you will receive. We do not send any other correspondence
notifying you of your mortgage payment. Please keep your mortgage
payment letter in a place that is easily accessible for you.
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You
survived your closing! You are now the proud owner of a "diamond
in the rough." Now, lets talk rehab…
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