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Posted On: 12/26/2012

QUESTION:

We are now refinancing a loan. We spoke with several closing providers, and the closing fee for the exact same work differed by $400. Is there any reason to pay more?

ANSWER:

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“Settlement,” “closing” and “escrow” are the terms used in local areas to describe the last step in a real estate sale or refinancing situation. The best way to think of such events is to look at the real estate contract or refinancing agreement as the script for a play. Closing simply follows the script under the direction of a neutral third party – the closing provider.

The party that conducts closing is an agent of the settlement process. “In all cases,” says attorney John Reilly in his standard guide, “The Language of Real Estate” (Dearborn Real Estate Education), “the escrow holder acts as a fiduciary and retains documents and entrusted assets until specified conditions are fulfilled. The holder is the special impartial agent for both parties and acts in accordance with the escrow instructions given by both.”

Depending on where you are located, closing can be conducted by an attorney, title company, escrow company, lender or a real estate broker. However, regardless of who does the work, the settlement provider must follow the precise instructions laid out by the contract or refinancing documents. If there is a dispute at closing between the parties, the escrow agent, being impartial, cannot be the advocate for one side or another.

A real estate transaction involves many charges at closing. One cost to consider is the settlement fee to be paid to the closing agent. Another is the title insurance sold by the settlement provider. If your property has been sold or refinanced in the past several years, you may be entitled to a title insurance “re–issue” rate that will cut your closing costs significantly.

As with any service, shop around and ask questions. Ask brokers and lenders for their recommendations and choose what’s in your best interest.

Peter G. Miller is the author of The Common-Sense Mortgage and a veteran real estate columnist. Have a question? Please write to peter@ctwfeatures.com.

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