STEP 8
CLOSE YOUR LOAN
Once your offer on the house has been accepted by the seller and the bank has issued final approval on your loan, you are ready to close your loan. Here are a few answers to common questions that may arise during the closing process.
The sale of real estate is completed with the transfer of title to the buyer. In New Hampshire, title may be conveyed by one of three types of deeds: warranty, quitclaim, or fiduciary.
With a warranty deed, the seller guarantees that he/she owns the property, is lawfully conveying it, and that there are no defects in the title (ownership) not stated. The seller stands behind the title and agrees to make good on any proven title defect. This is the seller’s “warranty.” This is the most common form of conveyance and gives the buyer the most protection.
With a quitclaim deed, the seller represents only that he/she did nothing to impair the title and is conveying nothing more than the title that the seller actually has. The buyer has no “warranty” or guarantee of title. If the property is purchased at foreclosure or tax sale, it is highly likely that the seller will only give the buyer a quitclaim, foreclosure, or tax deed. If so the buyer takes the property with all existing defects and problems, in other words “as is”.
In a fiduciary deed, an executor of an estate or some other “fiduciary” makes the conveyance. Here the seller acts merely in a representative capacity and makes no personal guarantees.
If you intend to mortgage the property, the lender will require that you pay for a title search. The lender does this to ensure that the title is sufficiently clear before lending money to you and using the real estate as collateral. The purpose of the title search is to uncover any prior mortgages, attachments, liens, unpaid taxes, easements or rights of way, restrictive covenants or other encumbrances filed in municipal records or the Registry or Deeds that affect the title. Certain title defects (such as a title restriction that prevents using the property as a home business) do not affect the lender’s mortgage but might affect you intended use of the property. Any title defect or encumbrance that cannot be corrected prior to closing would be grounds for you to be released from the P&S and to have your deposit returned.
Many lenders now require you to purchase Title Insurance as part of the mortgage process. Title Insurance protects the lender against loses that result from defects in the title to the property. At the time of closing you will be given the opportunity to purchase an owner’s copy of the Title Insurance policy at a discounted rate. If you choose not to purchase the owner’s policy, your ownership and investment in the property could be at risk if a title problem surfaces. Title Insurance is a one-time premium, paid at closing.
At the closing, title (ownership) of the property passes from the seller to the buyer. The closing often takes place at the lending institution providing the mortgage financing or the County Registry of Deeds. The seller receives their money from the lender and/or the buyer, the buyer receives a deed to the property, and the lender secures its loan to the buyer with a mortgage.