Real Estate Closing Services Key Terms

Understand key terms related to real estate closing services

Real estate closing services involve underwriting, finalizing documents, obtaining approvals from concerned departments and obtaining other documents. These services help make origination and closing processes fast, efficient and successful. Real estate closing service providers help to finalize loans, transfer the property title and perform many other related services.

Whether you want to become a service provider or you want to make use of real estate closing services, you will need to be conversant with the technical terms related to it. This guide will cover some of the important key terms related to real estate closing services.

 

Underwriting

Underwriting deals with determining the credit-worthiness of the borrower. It is the process through which bankers or lenders ascertain the borrower's repaying capability.
Try: You can get the meaning of the term underwriting from For Beginners, an informative website about the mortgage industry.

Title insurance

Title insurance protects the policy holder from any loss that arises from defects in the title. It is meant to protect an owner's or a lender's financial interest in property against loss due to title defects or liens. Title insurance is a mandatory requirement and a part of real estate closing services.
Try: National Title and Closing Services, Inc. explains the need for title insurance.

Homeowner's insurance

Homeowners insurance offers coverage in the event of damage to the owner's property as well as liability for injuries and damage caused to other people. Many banks make this insurance policy mandatory for homeowners and need this policy at the time of closing of the loan.
Try: Insurance Information Institute (I.I.I.) provides information about the homeowner’s insurance policy and its coverage.

Real estate appraisals

Real estate appraisals help lenders verify the market value of a house. An appraiser carries out the evaluation based on various factors, like condition and square footage of the house. This helps establish whether the loan is a good risk or not.
Try: For information regarding the appraisal process, you can refer to Mortgage Underwriters, an informative website for mortgage underwriting guidelines.

Loan processor (or loan officer)

The loan processor is the person who verifies documents and determines the credibility of the borrower. Loan processors verify all documents for originality and income of the borrower.
Try: Boston Apartments.com, an online real estate listing service, provides information about loan processors.

Certificate of Occupancy

A certificate of occupancy is a document that the local government (or the building department) issues. This document certifies a building's compliance with applicable building codes and other laws. This certificate is extremely important from a homeowner's point of view since a loan cannot be closed without this certificate.
Try: You can refer to wiseGEEK for information regarding certificates of occupancy.

Down payment

The down payment is the lump sum cash payment paid by a buyer at the time of closing the loan.
Try: For information about this key term, you can refer to LendingTree, LLC., an online resource.

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