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Early planning can ease your settlement day


Tee Tillman can tell right off when it's going to be a bad day at the settlement table.

Buyers who discovered a leaky faucet during a final walk-through of a house just hours earlier can't close until they get repair estimates. Sellers divorcing each other choose settlement as the time to haggle over splitting the proceeds. Or, too frequently, says the senior vice president of Fountainhead Title Group in Columbia, buyers and sellers come in on time and loan TTC documents never show up.

Settlement officers have seen it all -- those snags threatening the biggest investment most people will ever make. Some problems can't be avoided, they say, especially as home buying has become more complicated. State and federal laws call for ever more paperwork, out-of-town investors often add another layer of scrutiny and lenders can be overloaded with work, especially with refinance loans.

But buyers and sellers can prevent some of the more common headaches, experts say.

"The one key would be preparation -- and communication between buyer and seller and real estate agents," says William A. Hackney, president of Central Maryland Title Co. of Pasadena.

That preparation starts with the sales contract. Properly written, it can pave the way for a smooth closing, Mr. Tillman says. But some contracts lack key items -- seller disclosure information, how the purchase will be financed, when the home inspection will take place. Mr. Tillman suggests working with a real estate agent or attorneys to avoid that.

When choosing a lender, buyers should look beyond the lowest possible interest rate and consider how well-equipped the lender might be to process the loan. That can vary, says Michael Bell, owner of Columbia Town Center Title Co.

In one of every 10 cases, lenders fail to send the package of loan documents to the title office in time for settlement, he says.

"The biggest problem the last couple of years has been the volume of business because of refinancings," Mr. Bell says. He suggests buyers stay in touch with the lender throughout the process to make sure details don't fall through the cracks.

Because mortgage and title companies tend to be busier with settlements at the end of the month -- when buyers are trying to save on prepaid interest costs -- mistakes are likelier. Mr. Hackney says buyers might want to avoid that time.

Mr. Tillman also urges consumers to choose a title company well in advance of settlement and base the choice on a good recommendation.

"We get calls one day, and people expect to settle the next," he says. His company needs at least two weeks to prepare.

He also urges buyers not to wait for settlement day to take their final walk-through.

"You don't want that hubbub at the last minute," he says. "It's a distraction to have to call a plumber."

He says buyers should arrive at settlement with essential documents, such as their new homeowners insurance policy and the termite inspection report.

Most title companies require either a cashier's check or certified check for the down payment. The title company should have closing costs computed a day or two before settlement and, if real estate agents or loan officers have estimated accurately, buyers shouldn't be hit with last-minute, hidden costs.

The exact amount you owe may change slightly at settlement. If you owe a little more, a personal check is usually acceptable for the extra amount.

But even the most prepared buyers and sellers can't anticipate every complication. For instance, Mr. Hackney says, settlements today are more likely than those years ago to be delayed when out-of-town investors who buy mortgages question title work or a borrower's application at the last minute.

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