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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

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Testimonials

5/18/2016 Aloha Lance! Thank you all for your “local kine” support of the Big Island Chocolate Festival this year. It was really very successful and your support helped us keep the ball rolling as we brought tickets in. I will let you know how much was raised for the schools, but wanted you to see this online news story that mentions your sponsorship. Hawaii 24/7 has quite a large readership. Thanks again! http://www.hawaii247.com/2016/05/15/big-island-chocolate-festival-names-top-confections/ Julie Ziemelis-Owner Ziemelis Communications Integrated Communications Expert-PR
2/29/2016 In 15+ years of Hawaii Mortgage Company dealing with thousands of realtors, it is very rare when you come upon agents who really care and love what they do and want to make the transaction as wonderful as possible for all parties involved. Lance and Kimi go above and beyond for their clients and the mortgage professionals (like us!) who they are working with. In a world full of mortgage regulations, Lance and Kimi make sure to keep everyone on track of the timelines to ensure closing on time, which benefits both the sellers and buyers. We are lucky to work with them and look forward to many more transactions together in the future! Maura K. Shannon Manager / Mortgage Loan Originator NMLS #339190 Hawaii Mortgage Company NMLS #232582 443 Portlock Road Honolulu, Hawaii 96825 Tel: 808-988-6622 Fax: 808-988-7722 Maura K. Shannon
1/18/2016 I recently referred a client to Lance and he was spectacular. I refer a lot of agents outside of my market and Lance has by far been the most impressive I've ever had the pleasure to recommend. He has his thumb on the market and he is a master communicator. He is extremely good with follow up and he is one step ahead; just as you are thinking you want to reach out to check in with him, you'll find an email with an update answering the questions you hadn't even asked yet. He is everything you'd expect in a high performing professional and more. Plus his great personality makes him fun to work with. I'm truly impressed beyond all expectations. Jana S. Realtor Seattle WA.
10/14/2015 Lance Owens is the one of the best realtors in Kona. He has done a couple of my real estate purchases and is always above board on expectations and knows the Kona market as well as anyone. He has helped tremendously in getting the right deal at the right price. He is always available and very generous with his time, a gift when you are as busy as he is. Lance is trustworthy to handle your biggest investment. Bop P. Tampa, Florida
10/7/2015 I have personally known Lance for over 20 years... Even before he became a realtor! Lance is not your typical realtor. His ethics, integrity and work ethic are second to none. He and his partner Kimi are dedicated to work hard on your behalf... Not just out to get a commission! I would recommend Lance if you really want to get the best offer on your property and I would definitely use him again as my real estate agent!!! You will not be disappointed! I give Lance & Kimi 10 stars! Vicki Y. Honolulu, HI
Lance gives 100% always...we were lucky and grateful to be able to work with him several times! We liked the fact that he is honest, trustworthy, & always looking out for the best interests of his clients. At times the buying or selling process of a home can be a headache. Lance always has a demeanor that seems to make any situation positive. He exceeded our expectations and along the way gained our friendship. We would recommend Lance to our family and friends any day!!! Thanks ---Lance!!! :) C&D L H.O.V.E. HI
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