Title insurance. What would happen if you didn’t have it? What if you decided it’s not worth it? For starters, you would have bought a home that you can’t prove you bought legally. The title is the your right to possess and use the property .
What can happen without it? Problems arise when there are parties who want to be repaid loans and bills collateralized by the same property. There is the lender that made the first mortgage; the lender that opened the home equity line of credit; contractors whose unpaid bills resulted in liens on the property; taxing districts; and even homeowners’ associations waiting to be repaid from the proceeds of the house. Who will get paid and when? Without a title to the home? You are on the hook for the bills.
Title First will do a title search so that you don’t end up buying all those problems with the house. Being the new owner doesn’t mean that the problems go away. If you don’t have title insurance, you might have to sell the house just to repay the outstanding bills which have become yours.
A title search is usually required by all lenders. They want to make sure that title problems are cleared up before you buy the house. If the lender makes a mortgage with the home as collateral and it already has claims against it, the lender will lose money.
During the process of buying a home, Title First will check the property’s ownership history. Ideally, there is a “clear title”, meaning the current owner, who is selling to you, has a complete ownership stake in the property, without any legal claims against it.
If Title First does not find any outstanding claims or title defects, know that there could be a “yet to be discovered” issue that could arise and sully the ownership of the property years after the purchase. Maybe there was a mistake in the ownership history, an oversight committed by the title researcher, even a previously unknown heir. There could be a possible pending lawsuit or legal judgment.
A title defect that arises after a loan closing could, at the very least, mean a variety of legal costs — and, in a worst-case event, the loss of your property and the money you’ve put in it.
The Bottom Line:Title First works hard to ensure a seamless experience for you and your clients. From contract to closing, Title First handles all the details to help your transactions run smoothly and close on time.
Appraisal management company (AMC): An institution operated independently of a lender that, once notified by a lender, orders a home appraisal. Appraisal: An informed, impartial and well-documented opinion of the value of a home, prepared by a licensed and certifed appraiser and based on data about comparable homes in the area as well as the appraiser’s own walk-through. Approved for short sale: A term that indicates that a homeowner’s bank has approved a reduced list price on a home and the home is ready for resale. American Society of Home Inspectors (ASHI): A not-for-profit professional association that sets and promotes standards for property inspections and provides educational opportunities to its members. (i.e., Look for this accreditation or something similar when shopping for a home inspector.)
Attorney state: A state in which a real estate attorney is responsible for closing. Back-end ratio: One of two debt-to-income ratios that a lender analyzes to determine a borrower’s eligibility for a home loan. The ratio compares the borrower’s monthly debt payments (proposed housing expenses, plus student loan, car payment, credit card debt, maintenance or child support and installment loans) to gross income. Buyer’s market: Market conditions that exist when homes for sale outnumber buyers. Homes sit on the market a long time and prices drop. Meaning = you win. Cancellation of escrow: A situation in which a buyer backs out of a home purchase. Capacity: The amount of money a home buyer can afford to borrow. Cash-value policy: A homeowners insurance policy that pays the replacement cost of a home, minus depreciation, should damage occur. Closing: A meeting during which ownership of a home is transferred from seller to buyer. The closing is usually attended by the buyer, the seller, both real estate agents and the lender. Closing costs: Fees associated with the purchase of a home that are due at the end of the sales transaction. Fees may include the appraisal, the home inspection, a title search, a pest inspection and more. Buyers should budget for an amount that is 1 to 3 percent of the home’s purchase price. Closing Disclosure (CD): A five-page document sent to the buyer three days before closing. This document spells out all the terms of the loan: the amount, the interest rate, the monthly payment, mortgage insurance, the monthly escrow amount and all closing costs. Closing escrow: The final and official transfer of property from seller to buyer and delivery of appropriate paperwork to each party. Closing of escrow is the responsibility of the escrow agent. Comparative Market Analysis (CMA): An in-depth analysis, prepared by a real estate agent, that determines the estimated value of a home based on recently sold homes of similar condition, size, features and age that are located in the same area. Compliance agreement: A document signed by the buyer at closing, in which he or she agrees to cooperate if the lender needs to fix any mistakes in the loan documents. Comps: Or comparable sales, are homes in a given area that have sold within the past six months that a real estate agent uses to determine a home’s value. Condo insurance: Homeowners insurance that covers personal property and the interior of a condo unit should damage occur. Contingencies: Conditions written into a home purchase contract that protects the buyer should any issues arise with financing, the home inspection or other. Conventional 97: A home loan that requires a down payment equivalent to 3 percent of the home’s purchase price. Private mortgage insurance, which is required, can be canceled when the owner reaches 80 percent equity. Conventional loan: A home loan not guaranteed by a government agency, such as FHA or the VA. Days On Market (DOM): The number of days a property listing is considered active. Depository institutions: Banks, savings and loans and credit unions. These institutions underwrite as well as set home loan pricing in-house. Down payment: A certain portion of the home’s purchase price that a buyer must pay. A minimum requirement is often dictated by the loan type. Debt-to-income ratio (DTI): A ratio that compares a home buyer’s expenses to gross income. Earnest money: A “security deposit” made by the buyer to assure the seller of his or her intent to purchase. Equity: A percentage of the home’s value owned by the homeowner. Escrow account: An account required by a lender and funded by a buyer’s mortgage payment to pay the buyer’s homeowners insurance and property taxes. Escrow agent: A neutral third-party officer who holds all paperwork and funding in trust until all parties in the transaction fulfill their obligations as part of the transfer of property ownership. Escrow state: A state in which an escrow agent is responsible for closing. Fannie Mae: A government-sponsored enterprise chartered in 1938 to help ensure a reliable and affordable supply of mortgage funds throughout the country. Federal Reserve: The central bank of the United States, established in 1913 to provide the nation with a safer, more flexible and more stable monetary and financial system. Federal Housing Administration (FHA): A government agency created by the National Housing Act of 1934 that insures loans made by private lenders. FHA 203(k): A rehabilitation loan backed by the federal government that permits home buyers to finance money into a mortgage to repair, improve or upgrade a home. Foreclosure: A property repossessed by a bank when the owner fails to make mortgage payments. Freddie Mac: A government agency chartered by Congress in 1970 to provide a constant source of mortgage funding for the nation’s housing markets. Funding fee: A fee that protects the lender from loss and also funds the loan program itself. Examples include the VA Funding Fee and the FHA funding fee. Gentrification: The process of rehabilitation and renewal that occurs in an urban area as the demographic changes. Rents and property values increase, culture changes and lower-income residents are often displaced. Guaranteed replacement coverage: Homeowners insurance that covers what it would cost to replace property based on today’s prices, not the original purchase price, should damage occur. Homeowner Association (HOA): The governing body of a housing development, condo or townhome complex that sets rules and regulations and charges dues and special assessments that are used to maintain common areas and cover unexpected expenses respectively. Home equity line of credit (HELOC): A revolving line of credit with an adjustable interest rate. Like a credit card, this line of credit has a limit. There is a specified time during which money can be drawn; payment in full is due at the end of the draw period. Home equity loan: A lump-sum loan that allows the homeowner to use the equity in his or her home as collateral. The loan places a lien against the property and reduces home equity. Home inspection: A non-destructive visual look at the systems in a building. Inspection occurs when the home is under contract or in escrow. Homeowners insurance: A policy that protects the structure of the home, its contents, injury to others and living expenses should damage occur. Housing ratio: One of two debt-to-income ratios that a lender analyzes to determine a borrower’s eligibility for a home loan. The ratio compares total housing cost (principal, homeowners insurance, taxes and private mortgage insurance) to gross income. In escrow: A period of time (30 days or longer) after a buyer has made an offer on a home and a seller has accepted. During this time, the home is inspected and appraised and the title searched for liens, etc. Jumbo loan: A loan amount that exceeds the Fannie Mae/Freddie Mac limit, which is generally $425,100 in most parts of the United States. List price: The price of a home, as set by the seller. Loan estimate: A three-page document that is sent to an applicant three days after he or she applies for a home loan. The document includes loan terms, monthly payment and closing costs. Loan-to-value ratio (LTV): The amount of the loan divided by the price of the house. Lenders reward lower LTV ratios. Market value coverage: Homeowners insurance that covers the amount the home would go for on the market, not the cost to repair, should damage occur. Mechanic’s lien: A hold against a property, filed in the county recorder’s office by someone who’s done work on a home and not been paid. If the homeowner refuses to pay, the lien allows a foreclosure action. Mortgage broker: A licensed professional who works on behalf of the buyer to secure financing through a bank or other lending institution. Mortgage companies: Lenders who underwrite loans in-house and fund loans from a line of credit before selling them off to a loan buyer. Mortgage interest deduction: Mortgage interest paid in a year subtracted from annual gross salary. Mortgage interest rate: The price of borrowing money. The base rate is set by the Federal Reserve and then customized per borrower, based on credit score, down payment, property type and points the buyer pays to lower the rate. Multiple Listing Service (MSL): A database where real estate agents list properties for sale. Origination fee: A fee, charged by a broker or lender, to initiate and complete the home loan application process. Piggyback loan: A combination of loans bundled so as to avoid private mortgage Insurance. One loan covers 80 percent of the home’s value, another loan covers 10 to 15 percent of the home’s value and the buyer contributes the remainder. Principal, interest, property taxes and homeowners insurance (PITI): The components of a monthly mortgage payment. Private mortgage insurance (PMI): A fee charged to borrowers who make a down payment that is less than 20 percent of the home’s value. The fee, 0.3 percent to 1.5 percent of the yearly loan amount, can be canceled, in certain circumstances, when the borrower reaches 20 percent equity. Points: Prepaid interest owed at closing, with one point representing one percent of the loan. Paying points, which are tax deductible, will lower the monthly mortgage payment. Pre-approval: A thorough assessment of a borrower’s income, assets and other data to determine a loan amount he or she would qualify for. A real estate agent will request a pre-approval or pre-qualification letter before showing a buyer a home. Pre-qualification: A basic assessment of income, assets and credit score to determine what, if any, loan programs a borrower might qualify for. A real estate agent will request a pre-approval or pre-qualification letter before showing a buyer a home. Property tax exemption: A reduction in taxes based on specific criteria, such as installation of a renewable energy system or rehabilitation of a historic home. Round table closing: All parties (the buyer, the seller, the real estate agents and maybe the lender) meet at a specified time to sign paperwork, pay fees and finalize the transfer of homeownership. Seller’s market: Market conditions that exist when buyers outnumber homes for sale. Bidding wars are common. Short sale: The sale of a home by an owner who owes more on the home than it’s worth (i.e. “under water” or “upside down”). The owner’s bank must approve a lower list price before the home can be sold. Special assessment: A fee charged by a condo complex HOA when cash on reserve is not enough to cover unexpected expenses. Tax lien: The government’s legal claim against property when the homeowner neglects or fails to pay a tax debt. Third-party review required: Verbiage included in a home listing to indicate that the lender has not yet approved the home for short sale. The seller must submit the buyer’s offer to the lender for approval. Title insurance: Insurance that protects the buyer and lender should an individual or entity step forward with a claim that was attached to the property before the seller transferred legal ownership of the property or “title” to the buyer. Transfer stamps: The form in which transfer taxes are paid by the home buyer. Stamps can also serve as proof of transfer tax payment. Transfer taxes: Fees imposed by the state, county or municipality on transfer of title. Under contract: A period of time (30 days or longer) after a buyer has made an offer on a home and a seller has accepted. During this time, the home is inspected and appraised and the title searched for liens, etc. Under water or upside down: A situation in which a homeowner owes more for a property than it’s worth. Underwriting: A process a lender follows to assess a home loan applicant’s income, assets, credit etc. and the risk involved in offering the applicant a mortgage. VA home loan: A home loan partially guaranteed by the United States Department of Veteran Affairs and offered by private lenders, such as banks and mortgage companies. VantageScore: A credit scoring model relied upon by lenders to make lending decisions. A borrower’s score is based on bill-paying habits, debt balances, age and variety of credit accounts and number of inquiries on credit repots. Walk-through: A buyer’s final inspection of a home before closing. Water certificate: A document that certifies that a water account has been paid in full. The seller must produce this certificate at closing.
With wire fraud and email hacking on the rise, we must all become more diligent in protecting our clients’ information. At Title First Agency, we take security seriously and we put our company through a rigorous audit (SSAE 18). In December, we had a perfect report for the 4th year in a row. This is one of the steps we take to make sure our clients’ data is safe and secure. Title First is one of only a handful of title agencies across the country to go through these audits
Another aspect of protecting our clients’ information is educating prospective buyers, sellers and real estate professionals about the dangers of wire fraud and email hacking. While buying and selling a home is an exciting time, there can be pitfalls for unsuspecting consumers. We’ve made a video with four tips to protect money and advice on what to do if targeted by a scam.
Title First Agency’s software platform and third-party integrations are crucial to providing our clients with the most efficient title services. Our objective is to continually refine state of the art technology to assist with compliance. This is achieved by working with the top technology providers in the business. We also work closely with residential realtors and their clients, through the escrow and title process to make sure that proper steps are taken to successfully close.
The Bottom Line: Protecting against wire fraud and email hacking requires all parties of a transaction to stay diligent throughout the process. If there are any questions regarding potential wire fraud, email hacking or anything else that feels “off”, Title First Agency is here to be contacted to discuss any issue with our agents.
Buying a home can be chock full of complications and setbacks, or it can go remarkably smooth and fast if it is planned carefully. The Realtor needs to stay focused and be the voice of reason as they facilitate the process at closing and make sure all parties have completed all unfinished business prior to coming to the “closing table”. Here’s a quick list that Realtors can use to ensure a smooth closing.
Repairs: The Realtor should check on the status of all repairs that were to be made on the home the day before closing. If there was an agreement that something needed to be fixed by closing, make sure that it is. If there was an arrangement for repairs to be taken care of after closing, make sure all the necessary paperwork shows this as fact. A final walk-through should be done with the buyers. The sellers should make sure, with their Realtor, that the property is in the condition promised and all of their personal items are removed.
Title Insurance: All of the title work should be checked to ensure clear title and that the property can be transferred without any obstructions. Should there be any title issues that might include judgments or liens, they must be settled prior to the hour of closing. The moment of truth in a real estate transaction happens at the closing table. Title First Agency will work hard to ensure a seamless experience for you and your clients. From contract to closing, we handle all the details to help a transaction run smoothly and close on time.
Financing: The lender should be contacted the day before the closing to be certain that all the documents they need have been received. Occasionally, the closing is delayed due to one document or one final verification. The interest rate for the loan should be locked as well as the final mortgage and monthly payments. The Realtor should make sure the buyer has all the funds available and ready to close. Having everything in hand the day before gives both the buyer and the seller 24 hours to review everything and have any questions ready, errors noticed or points not understood addressed.
The Bottom Line: A thorough Realtor will make sure the buyers are ready for the closing. First-time buyers may not realize all the people that could possibly be at the closing table, and all the paperwork there will be that needs their signature. The buyer needs a cashier’s check or arrangments made to wire the closing funds to the escrow company. The seller should bring all the keys, garage door openers, alarm codes and any other controls to the settlement. The Realtor should make sure and confirm that all utilities have been disconnected by the sellers and set up ready for the buyers upon closing.
Some of the best deals people can make is buying a home during the Christmas holiday season. The real estate inventory is limited as there are fewer people selling homes, but this will come as an advantage to buyers. The truth is negotiating a favorable price will be much easier than other times of the year. Other than getting a good deal on a new home there are a few really good advantages to now, being the time to find and buy that home.
Closing on a new home before December 31 will bring tax benefits. Deductions can be itemized such as points paid upon closing, property taxes and mortgage interest rates. Often times, a move at this time of the year has to do with an employment move which can bring more tax breaks.
Sellers who choose to have their home on the market during the holidays are usually more motivated than the rest of the year. Listing a home during an off peak time such as this often means a job relocation, or some time sensitive issue that puts buyers in a position to get a better deal.
Everyone involved with the real estate deal – sellers, Realtors, title agencies, banks, inspectors, lenders – want to wrap the deal up before the holidays. This time of year brings about a much more focused and speedy process that takes longer during the rest of the year. Just make sure before you begin the process that the Realtor that you choose will not be leaving for vacation and become MIA for a week or so.
Favorable financing comes at holiday time. Interest rates on mortgages and loans typically hit a lower point around the holidays because fewer people are looking to borrow. There is historically, less financial business being done during December.
And, another pretty fine reason to buy a home during the holidays? January and February bring the seasonal sales. Think – new furniture, appliances, decor, even next year’s holiday decorations!
The Bottom Line: Buyers should watch the market conditions as well as look online at what is out there. Get the word out to Realtors that can help find any “pocket listings”. Check out the many online calculators that are available and see how much can be saved over the life of a mortgage with even a little decrease in interest rates that tend to happen during the holidays.
The “generation Y” or the “Millennials” were born between the years of 1977 and 1995 and have taken the spotlight in real estate news lately.
They are skeptical when deciding to buy a home. They are the generation that saw their parents, relatives, etc. lose a home in the recession of the 2000s. The Millennials are thinking twice before buying to make sure the decision is right. They analyze and make informed decisions about everything they buy because the internet makes the process easy to do so.
What do they want in their new home?
Updated Bathrooms: Most of their savings will be used for the down payment and furniture. They don’t want to update bathrooms, which can be expensive. If your bathrooms need some love, ask an experienced Realtor what the current design trends are.
Large Open Kitchens: Millennials aren’t looking for dining rooms as the kitchen is the place where their friends and family end up congregating. They see the kitchen as generations of past viewed a living room. It’s important the kitchen is stylish and updated with integrated appliances and gorgeous designs.
Smart Home: The Millennials were brought up in the world of technology and are willing to pay more for homes that have smart home features. They want to know the home has wireless service and internet and cable and telephone are not priorities. There have been cases that a home was dismissed because the signal to their mobile phone was weak.
Home Office: Many Millennials don’t travel back and forth to an office for work. They work from the comfort of their home. A Realtor will help you dedicate a room to be shown as a workspace/home office. Staged right, a Millennial will be able to envision themselves in it.
Location: Proximity to public transportation, easy access to major metropolitan areas, walking distance to restaurants, schools, etc. They want their home to be in a location where homes are affordable and jobs are plentiful. They don’t want to deal with long commutes or traffic issues.
Community: Besides the location, the importance of community is at the top of the list. Millennials want to be involved in their neighborhood. Seventy-five percent of responders to a Fannie Mae survey said that feeling engaged in their community was their main reason for wanting to own a home.
Outdoor Living Space: Entertaining outside is just as important as inside to the Millennials. They will pay more for a home that has an exceptional outdoor space that features a patio, an outdoor kitchen, or a grand deck.
The Bottom Line: Millennials don’t want to buy a fixer-upper. The first step to attract them as buyers is to have a Realtor showcase the home for sale with beautiful professional photos online – the first place they will look. It’s also important to have the most skilled Realtor who understands what Millennials are looking for and will be able to highlight them to increase the chances of a quick and profitable home sale.
Purchasing a first home can be daunting. Here are a few tips that can help make the process a bit easier.
Location. Decide on this first to eliminate “buyers remorse” down the road. Do the homework and research neighborhoods. School districts, local safety, and crime statistics can affect a home’s value. Even if you have found your “dream home”, the neighborhood could be completely wrong. Drive through the neighborhood at different times of the day and night and watch the traffic, how are the streets and sidewalks? What are the neighbors like and how do they take care of their homes? Is the home close to places you might frequent (gym, grocery, schools)? Are there children playing safely outside?
Shop Online: Now that you know where you want to buy a home, there are plenty of online options to start the search. Zillow, Trulia, Realtor.com, and any local real estate agency. Narrow down Realtors that you want to connect with by reading their online reviews, looking at their websites, social media platforms and googling. The Realtor you choose will be the expert you will rely on most. Interview several before settling on one.
Be Frugal: Zero in on homes that are listed for less than the amount of money you have been approved for. Many first time homebuyers don’t calculate the other monthly expenses or problems that go along with homeownership (broken appliances, etc). Furthermore, other than the down payment, there will be money needed at closing.
Negotiate: This is where having the best Realtor will come in beautifully. Once you make an offer, the seller might come back with a counteroffer and after discussion of the pros and cons with your Realtor, you will know if you should offer more or walk away. Keep your emotions out of the entire process. Too many people pay too much for a home because they have “fallen in love” and this type of emotion can lead to very bad financial decisions.
Do an Exhaustive Inspection: Do the homework and find the very best Home Inspection Company with the top ratings. Be there with the inspector and learn about the home, ask questions – you need to know that the home you are purchasing is structurally sound. See the good and the bad – what repairs will be needed? Is the electric adequate for today’s use? How are the water pipes, heating, and air conditioning systems? When the inspection is complete, get a verbal and a written report. Bonus – the company will be available at a later date for more questions.
The Bottom Line: The above tips are just a few important ones to help navigate the process, save money and avoid common mistakes. Find a Realtor. While it’s easy to go through online homes and narrow down what you want, it’s not so easy to get from that point to the closing. There is the transfer of the deed, title search, negotiating, asking for “extras” that you might be entitled to, completing all paperwork and being the single point of contact with the seller.
A home that has been foreclosed means that the owner is no longer legally bound to the property and it will be placed in a foreclosure auction. This will be public record and once the home was transferred from a homeowner to a bank or lender, it will be available at a reduced price in the housing market.
Purchasing a foreclosed home can be high risk but can also an incredible investment. The first thing to do is to choose the best Realtor that specializes in foreclosed homes. The home you have found may be listed at an affordable price, but often buyers underestimate the money they will spend to make the home livable. Usually, these homes are in need of repair and the Realtor will help determine if it is worth the investment.
Most importantly, the buyer must do a physical inspection because buying a foreclosed home is buying “as is”. The bank that now owns the home does not have to disclose and usually doesn’t know any of the previous history, or any problems that have taken place. Missing appliances, hidden holes in floors & walls, vandalism, broken piping and stolen fixtures are just a few of the details easily missed. Trees, vines, and bushes can uproot foundations and grow into the piping. The longer the home has been sitting – which can be quite a long time frame – the more damage is found.
The Bottom Line: Buying a foreclosed home might end up costing more in repairs than planned and may end up being a bad financial move. The home might be sold at a great price, but in the end, the home could be a money pit. Getting the help of a skilled Realtor is paramount in this situation because what you see and don’t see in the home is what you get. It is essential that the buyer knows what they are getting into and a good Realtor will be able to highlight all the pros and the cons.
See Our National Coverage Map
