No Headline

July 27, 2008|By Jamie Smith Hopkins | Jamie Smith Hopkins,Sun reporter

If something must go wrong when you're trying to buy or sell a house, the last place you want it to happen is at the settlement table. It's hard to back out or delay when everyone's on hand to close the deal; do what you can in advance to avoid problems. Research and preparation can really help you here.

"Ask a ton of questions," suggests Brian Sullivan, a spokesman for the U.S. Department of Housing and Urban Development.

His top problem-avoidance recommendation: Get your HUD-1 settlement statement from the company handling your closing - in Maryland, your title agent - 24 hours before you're scheduled to settle. That form lists your bottom-line costs. Buyers especially will want to look closely to make sure the loan origination and other fees match earlier expectations.

"As best as you can, get your good-faith estimate that you were provided at the beginning of the process and compare the line items," Sullivan said. "You shouldn't be doing this math at the closing table. And if you've got questions, challenge these costs so that they can adjust them."

But people frequently don't see their settlement statement until settlement. Key information for the form comes from your lender, and "many times, we don't get a lender's package until the day of closing," said Jeffrey E. Margolies, president of the Maryland Land Title Association and a settlement attorney with Sage Title Group.

Sullivan suggests you tell your title agent early on that you'll want the form one business day before closing, and that you know you have a legal right to see the most authoritative version available. Speak up - you need to request it, or you probably won't get it pre-settlement - and don't wait until the last minute to ask. You might mention the Real Estate Settlement Procedures Act, or RESPA, which is what gives you that right. "Watch people be absolutely amazed that you know this word," Sullivan says.

Other hints for a smooth - or at least smoother - settlement:

*Shop around before choosing a title agent. One of the other firms involved in your sale will probably recommend a company, but the price charged for settlement services can vary "considerably," says Barry R. Glazer, broker for Century 21 Downtown in Baltimore and a former title company owner. Shopping around is good advice for all parts of the homebuying process: A recent study conducted for HUD found "significant and unsupported variations in loan charges, title fees and other closing costs" across the country. HUD concluded that many buyers pay thousands of dollars too much.

*Compare title agents, not just their prices. Ask how long they've been around. See if they have consumer complaints with the Better Business Bureau. Check that they're licensed by calling the Maryland Insurance Administration at 800-492-6116 or going to

*Whether you're buying or selling, don't schedule the final walk-through of the home too close to closing. Glazer suggests doing it at least two days before in case there's something wrong.

*Selling? Margolies says the title agent will want details about any mortgages you have on the property, including home equity lines of credit, and about any condo or homeowners association fees. If you're on the hook for ground rent, be sure to pass on the ground-rent owner's name, contact information and how much you're paying. And when you get to the table, make sure the buyer's check is for the proper amount.

*Buying? Bring a certified or cashier's check and proof of homeowners' insurance to the closing table. You'll want both the insurance binder and the receipt of payment. Lenders typically require the insurance be paid for a year in advance, Margolies says. If the loan requires a termite inspection certificate, you'll want that, too.

*Don't forget the photo ID - a driver's license will work.

*Consider a settlement date earlier in the month. Buyers usually want to close at month's end because it means less mortgage interest to pay upfront. But an earlier settlement date will help you avoid the title agent's busiest times. "You're going to get less of the last-minute type activity," Glazer says.

*Avoid settling at the end of the day or on a weekend. "You don't have access to bankers or loan officers who can resolve issues with the loan," says D. Gregory Howard, a Reisterstown attorney whose practice includes real estate.

Remember that you can ask to reschedule the settlement. "Extensions are granted every day," says Katherine F. Connelly, executive director of the Maryland Real Estate Commission. But think ahead. If you're selling a house and buying another, you might not want to schedule both settlements on the same day.

Some people hire an attorney to keep an eye on settlement preparation and sit at the table with them, just in case. If a deal goes wrong at the last minute, you'll want to know what breach-of-contract issues you'd face by pulling out - and what other options you have.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.