Explanation of Settlement

   Settlement is intended to be a comfortable final document signing session consummating the sales and loan transaction. Potomac Title coordinates the preparation of the final settlement and loan documents with your real estate agent and lender so that you can fulfill your requirements under the terms of the sale contract.

   Copies of all of the documents that you sign at closing will be given to you in a folder at closing, including a copy of the HUD-1 settlement statement, which you will need to keep for tax purposes. If a pre-settlement walk-through was conducted, any outstanding items will be discussed at the beginning of settlement.

HUD-1
   This is a detailed breakdown of all of the charges and credits to the purchaser and seller. The HUD-1 lists the fees in connection with the transaction, included, but not limited to, lender charges, lender escrows for taxes and insurance, settlement fees, title insurance, government recording charges, survey, termite and homeowners dues. In addition to the HUD-1 settlement statement, you will be required to review and sign many standardized forms prepared by your lender.

Title Insurance
   There are two types of title insurance known as lender's and owner's coverage. Lenders require that you purchase for their protection a policy of lender's title insurance. At settlement, you can purchase owner's title insurance that in consideration of a one-time premium insures and guarantees your ownership of the property.

LENDER DOCUMENTS

   Lender's generally prepare their own loan documents and are most familiar with their content. Most lenders provide you with numerous disclosure documents prior to closing to better acquaint you with your new loan. Your loan officer is an invaluable contact for questions concerning your loan.

Good Faith Estimates
   Prepared by your loan officer at loan application advising you of estimated costs associated with your loan closing.

Truth-in-Lending Disclosure
   This form is a statement to the borrower of the cost of the loan over the life of the loan.
Note - this document is the borrower's promise to pay the lender for the loan, and includes your loan amount, interest rate, payment due date and late fees.

Deed of Trust
   This document is filed in the local County Courthouse to secure your loan to the property. It details the application of the payments, covenants and conditions associated with the loan payments.

First Payment Letter
   This statement shows the breakdown of the monthly principal and interest from the Note along with the tax and insurance escrows that the lender will collect.

W-9
   This IRS form gives your social security number to the lender, so that they can report the interest that you pay on the loan to the Internal Revenue Service for the interest tax deduction.
Loan Approval/Commitment :: this letter from the lender states that your loan has been approved. Sometimes it will be sent to you prior to settlement; other times it is signed at the settlement.

Tax Authorization
   This is a written instruction from you to the local real estate tax authority requesting that they send the tax bill directly to the lender who is holding your money in escrow for the payment of the real estate taxes.

Loan Application
   This is a snapshot at a point in time concerning your financial status. You will verify that the information you provided at loan application is substantially the same.

Termite Inspection
   Per the real estate contract, either the purchaser or the seller provides a report, from a licensed exterminator, indicating any evidence of infestation.

House Location Survey
   The survey shows the physical location of the improvements on the property. Condominium properties do not have a house location survey.

Approximately eight weeks after settlement, the original recorded Deed, and the owners title insurance policy will be mailed to you at your new property address.