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 Closing Documents 

Title search and title insurance
A title search is a detailed examination of the historical records concerning a property. This search must be completed prior to closing. These records include deeds, court records, property and name indexes, and many additional documents. The purpose of the search is to make sure the buyer is purchasing a house from the legal owner and there are no liens, overdue special assessments, or other claims or outstanding restrictive covenants filed in the record, which would adversely affect the marketability or value of title. This exercise will ensure that the property is free and clear of any liens with the exception of any debts that will be paid with closing proceeds. The title search results in a ‘certificate of title'. The certificate of title does not offer any kind of protection to the lender or the buyer. Title insurance protects against any tax liens, unpaid mortgages, or judgments missed in the research of the history of title on the property.

Basically there are two different types of title insurance policies - a lender's policy and an owner's policy. The lender's policy protects the lender's interest in the property as security for the outstanding balance under the buyer's mortgage. The lender normally requires the buyer to purchase the lender's policy. The owner's policy safeguards the buyer's investment or equity in the property up to the face amount of the policy. The cost of the policy is usually based on the loan amount. Buyer's Coverage/Owner's Policy is strongly recommended. Title Insurance is paid at closing and is a one-time premium.

HUD Statement
An HUD statement is a government form also referred to as a settlement statement. This document is prepared by a closing agent. It outlines the financial disposition of all funds as agreed to in a sales contract. The statement reflects the buyer's money needed to close (the down payment) and the seller's net proceeds. A buyer must be given the opportunity to review the HUDI statement prior to closing.

Proof of Homeowners Insurance
All lenders require proof of homeowners insurance at closing. The premium may be paid outside of closing or at closing. Because states vary, you will need to depend on your real estate professional for specific items required at closing such as:

• wood infestation report
• mold report
• earthquake radar
• hurricane exemption
• flood certificate

Note: Some states may require additional information or sources of funds and both of these items are a result of the patriot act.