Additional Settlement Services

When applying for a loan, the lender will require several settlement services from you. Here are some of the ones you'll need.

Title Services & Settlement Agent

After purchasing your new home, you'll receive a "title", otherwise known as a deed or a proof for your ownership of the home. Lenders require certain title services as a method for protection against claims on your property. These services include the title search and examination, preparation of a commitment to insure, conducting the settlement, and the necessary administration and processing services.

It's important to note that while a lender’s title insurance policy does protect the lender; it does not protect you. If a title claim occurs, it can be financially devastating to an uninsured homeowner, which is why you'll need an owner's title insurance policy. If you are buying a newly constructed home, make certain your title insurance covers claims by contractors. These claims are known as “mechanics’ liens” in some parts of the country.

In many states, title insurance premium rates are filed with the state and may not be negotiable, but other title service related charges may be. Be sure to ask your title agent about any available discounts, such as a reissue rate or a simultaneous issue discount.

Title services also include the services of a settlement agent. Settlement practices vary from locality to locality, and even within the same county or city. Depending on the locality, settlements may be conducted by lenders, title insurance companies, escrow companies or attorneys for the buyer or seller. In some parts of the country, a settlement may be conducted by an escrow agent. Unlike other types of settlement, the parties may not meet around a table to sign documents, which is why it's crucial for you to inquire as to how your settlement will be handled.

Surveys

Survey lenders or title insurance companies may require a survey to disclose the location of the property. The survey is a drawing of the property showing the location of the house and other improvements on the property. If you determine which company conducted the previous survey, you may be able to request an update, thereby avoiding the cost.

Homeowner’s Insurance

As a condition to settle, most lenders will require that you procure homeowner’s insurance, flood insurance, or other hazard insurance to protect the property from loss.

With any of the aforementioned settlement services, it's best to price shop as much as possible to ensure you minimize additional costs to you. For further questions on settlement services, contact Michna Law Group at (847) 446-4600 or at BJM@MichnaLaw.com.