Tag: mortgage

Rights of a Property Owner

The ownership of private property is one of our most cherished freedoms. Property divides power between the government and the individual and allows citizens to be rewarded for their own industry. But to fully enjoy the benefits of property ownership, knowledge and vigilance in defending and protecting those rights when they are being threatened.

In instances where either private or public actors are seeking to challenge your property rights, be prepared to defend yourself by knowing, in advance, what your rights are or by consulting an experienced real estate or eminent domain lawyer.

Following these tips will also help you better protect your interests as a property owner.

Know Your Rights

When you own real property, you have a bundle of legal rights that go along with the ownership, including:

  • The right of possession
  • The right of control
  • The right of exclusion
  • The right to derive income
  • The right of disposition

Property rights can also extend to:

  • surface rights: the right to use the surface of the land
  • riparian rights: the right to any water on your property
  • subsurface rights: the right to use what is below the surface such as oil, gas and minerals
  • air rights: the right to the area immediately above your property

Of course, these rights have exceptions and limitations and may also come with legal obligations (e.g, taxes). They may also be lost, voluntarily transferred or even regained after a period of time such as when you rent a portion of your property and the lease terminates.

Property rights may also vary from state to state and from community to community. They may be subject to local, state, and federal laws. Knowing your rights as a property owner makes you more aware of what you can and cannot do with your property, and how to protect it from intrusions or encroachments.

Familiarize Yourself with core title documents

There are many documents that contain vital information about a landowner’s property and the extent of their ownership rights. Among these documents, some of the most important typical ones are the following:

  • The Deed and other documents of title and exceptions to the title, sucah as easment
  • The Deed of Turst or other documents showing that the property has been mortgaged or collateralized for payment of a debt
  • Survey and boundary documents
  • Zoning maps and master plans\

Go Through the deed to the property

Property deeds are signed legal documents that transfer the ownership of the real property from one person to another. For the deed to be legally operative, it must identify both the grantor/seller and the grantee/buyer and contain an adequate description of the property, among other elements.

There are different types of deeds, each type providing different levels of protection to the grantee, as well as the obligation of the grantor. Deeds also typically include deed restrictions, which are important in understanding the extent of the owner’s use and enjoyment of the property.

Understand the Title Documents

Title documents prove the ownership of control and possession of a person over specific property or parcel of land.

Aside from establishing ownership, however, title documents also disclose liens, defects, deed restrictions, and exceptions to title that affect the property. Reading and understanding these documents will give you an insight into the limitations and exceptions that apply to your ownership of property.

Consult with a real property or eminent domain attorney

Anytime you encounter issues concerning your property rights, whether it’s a defect in title or a potential taking due to an act of eminent domain, seek the professional advice of a real estate or eminent domain attorney before taking any further steps.

Regardless of the type of property you own or property-related issues you’re faced with, these professionals can help shed light on the situation and steer you towards a more favorable outcome.

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A $5 Million Home for Zero Money Down?

At the start of 2020, the Bluewater Navy Bill, which was signed on June 25, 2019, by President Trump, became law, bringing some significant changes to the VA Home Loan program. The most significant change was the removal of loan limits, which in 2019 had previously been at $484,350.

This removal of loan limits freed up qualified lenders to start loaning out a lot more than what was previously possible. As a result, VA lenders set their loan limits, with lenders like VA Home Loan Centers setting their loan limit at $5 million. This no loan limit rule, combined with the fact that VA home loans do not require a down payment, makes it possible to take out a $5 million home loan for zero down.

Regardless of loan limit, lenders are still required to make sure that the applicant can afford to make their monthly payments on time.

The 28/36 rule means that an individual’s mortgage should not exceed 28% of their gross monthly income, and their debt-to-income ratio should not exceed 36% of the total revenue. Therefore, when purchasing a home, an individual should ensure that their monthly household expenses do not exceed 28% of their monthly income. While at the same time, their household debt should not exceed 36% of their monthly income.

This rule is not absolute, however. Some borrowers may exceed a 50% debt to income ratio with underwriter approval and what is known as compensating factors. A compensating factor can be certain liquid assets, significant employment stability, and related indicators of financial stability.

VA Home Loans Information
Created in 1944 by an Act of Congress, VA Home Loans has since helped more than 22 million veterans achieve the dream of homeownership. Today, VA loans remain one of the most significant benefits of being a member of the military.

VA loans offer several incentives like zero down payments, low monthly costs, low-interest rates, no mortgage insurance premiums, and no prepayment penalties. In addition to this, the loan also offers 15 to 30-year fixed mortgages.


VA Eligibility Requirements
When it comes to eligibility, VA loans are exclusive to Veterans, Active-Duty Service Members, and the surviving spouses of veterans who passed away due to their service. In addition to being a military member, there are also several military services, income, and credit requirements.

Military service requirements to be eligible for the VA home loan vary depending on what kind of service the applicant participated in while in the military. Active-duty applicants must have served for at least 90 consecutive days while in wartime and 181 during peacetime. Reservists and members of the National Guard must have served for at least six years.

The applicant must have a stable income to qualify for a VA home loan. Qualifying incomes include social security, VA disability, and full-time jobs. Moreover, many more revenues must have existed for at least two years, like part-time Jobs, self-employment income, 1099 income, and seasonal income.

However, some incomes do not qualify for the VA loan. These include Worker’s Compensation unless it can continue for three years, the GI Bill, and cash payments.

When it comes to credit requirements, VA currently does not have specific needs, and most VA lenders have a minimum credit score requirement ranging from 580 to 640.

Conclusion
It is possible to get a VA home loan of $5 million; however, lenders must ensure borrowers can afford their monthly payments. Still, VA loans offer some great deals for those who are lucky enough to qualify for them.

Phil Georgiades is the CLS for VA Home Loan Centers, a government-sponsored lender specializing in VA loans. He has over 22 years of real estate experience. We would be happy to help you learn more about our programs or apply for a VA loan if you click here.

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The Good and The Bad of Buying a New Construction Home

Nothing beats the feeling of being the first person to live in a newly-built home. Everything is shiny and untouched. There are three ways to buy a spanking new home: already built on spec, semi-custom home built as part of a development where you will be able to choose from a set palette of finishes and upgrades, or a purely custom home designed and built to your specifications from start to finish. The process of buying a new construction home is a lengthy one. Here are some samples of what you should know; the pros and the cons.

Some Good News (Pros)

Personalize & Customize: For some, this is the most exciting part of new construction. You have the opportunity to choose what you want that reflects your tastes, preferences, and personality by choosing the finishes you want. This is an opportunity that doesn’t come with buying an existing home.

Energy Efficient: With modern construction and the integration of advanced technologies comes the added benefit of energy efficiency. New construction homes are built with the latest advances in construction materials and building practices, which can give new homeowners the benefit of reduced monthly utility bills

Pick Your Lot: The lot you choose for your home can impact your quality of life and the future resale value of your home. Consider the view, the location on the street, what direction the home faces at sunset & sunrise, and would future home buyers find the positioning of the home as convenient?

New Home Warranty Protection: Buying a new construction home means that everything in it often comes with a warranty. You can confidently know the builder will cover the cost of any issues during the warranty period, such as a leaky roof or broken water heater. Unlike when buying an existing home where you may not know about hidden defects or problems until after you’ve purchased the home – and you’re left with the bill.

Designed for Your Lifestyle: With several options to choose from, a new construction home lets you design a space that fits your style. The choice is yours. Pick ceramic tile, granite countertops, finished wooden cabinets, or palatable neutral wall color, your home will be finished in a way that’s tailored to your preferences.

Some Bad News (Cons)

Price: On average, it costs about 20% more to build your own home than to buy an existing one. Often, buyers walk through the builder’s model homes and want their new home to be just like that one. In reality, the model home will be much more expensive than the traditional properties in the community. It’s best to use a Realtor to help through the process.

Landscaping: When developers create new neighborhoods, they tend to tear down all of the vegetation in the area. It’s the most costly way for them to break ground and get started. Landscaping is just one part of the process of planning a custom home but is often an afterthought. The landscaping you want for your home may have an impact on the structural design of your home and where it will be situated on the property. Most new construction homes will give you a little bit of landscaping in the front to start off with but they won’t do anything in the backyard. This means that you’ll probably have to fence the backyard if that’s what you need, start from the ground up with growing trees (that take years to grow) and plants, and you may even need to lay turf or seed the lawn.

Homeowner Association Fees: Most new subdivisions and developments will have some sort of homeowner association dues that cover management and any common area maintenance. That being said, many of these new subdivisions will also have community amenities such as clubhouses, swimming pools, or playgrounds.HOA dues can range anywhere from less than $100 a year to several hundreds of dollars per month.

Commute: New construction typically happens further out from the cities. A new home usually means a longer commute to work. It also means you might have to wait for shopping, schools, libraries, firehouses and other key pieces of infrastructure to be built. Those things usually come after there are enough homes and people to support them

Noise: Unless the home that you decide to buy is the last one to be built in the neighborhood, you can count on the daily noise of the rest of the homes being built around you. This could be several months or even years depending on how long it takes to build up the community

The Bottom Line: Building a new home requires a buyer to be very involved.  A custom build gives you full control, but also means managing a lot of details and making hundreds of little decisions. No matter where you decide to build a new home there will be pros and cons to new construction that must be weighed properly before making a final decision.

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Title Insurance for your Home

When you are out looking for your new home, it’s not on the top of your mind: title insurance. But, it should be. It’s one of the most important parts of the home buying process. Something that can protect owners of real property events and matters that can be brought up from the past. Imagine spending your nest egg on a down payment, closing costs, and a few years of mortgage payments. Suddenly, an heir to a former owner is suing to obtain the home, arguing that it never should have been sold to you in the first place. There is no reason to worry if you have title insurance, yet many homeowners decline it. Once they know how it is created to protect them from unknown claims against their property that can pop up years down the road they are less inclined to resist.

Title insurance is much more than a lender requirement. It’s knowing that what you are buying is free of any third party claims to ownership or use of any part of it. It assures the homeowner that they are clear of anything that would affect the ability to sell or borrow against their new property.  After thousands of real estate closings here at Title First, we can give you a rundown of the most common issues we can save you from:

Mistakes on titles, especially lately, that are transferred through a sale of foreclosure without certain rulings met, thus making the transfer of the title invalid.

Mistakes within all the paperwork brought to a closing. Somewhere along the line, there may be a forged signature or recorded documents that have been signed by people without legal authority.

Mistakes made during the probate process for the previous owner that overlooked someone else’s rightful claim (undisclosed heirs) to the property of someone else’s interest in the property. Misinterpretation of wills and deeds.

Mistakes made in the description of the property.

Mistakes were made where claims, tax information, or easements had not been recorded properly in the public record.

Mistakes missed of liens on the property or judgments against the previous owner.

Mistakes in unpaid taxes or mortgages and unpaid debts.

Investors need to be alert when protecting their investments. Title insurance assures the homeowner that the title to the property purchased is free of any defects and is “clear to close”. It is a guarantee that all matters of record that could harm the title of the new property have been disclosed and resolved. Title insurance protects the homeowner against any potential claims should an undisclosed event threaten the ownership of the property. Give us a call today at Title First Agency: 1-866-320-8400

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Rising Energy Prices and Tips to Keep Your Bills Down

With prices surging worldwide for heating oil, natural gas, and other fuels, the U.S. government said Wednesday it expects households to see their heating bills jump as much as 54% compared to last winter.

Whether you heat your home with a furnace, boiler, or central heating, there are ways to save money on your monthly bill. Begin now to winterize your home as the cooler temperatures are ushered in. It’s always a good idea to have your furnace inspected as well as stock up on filters. A dirty filter makes your furnace/heat pump work harder which leads to higher heating bills. Change the filters about once a month.

There are simple things that add up that will help reduce your monthly bills.  A few inexpensive ideas:

Turn your thermostat down. According to the Department of Energy, you can save as much as 10 percent a year on heating and cooling by simply turning your thermostat back 7-10 degrees Fahrenheit for eight hours a day.  Those eight hours can be while you are away at work. They also suggest having your thermostat set to 68 degrees when you are at home and dropping that even lower when you’re sleeping.

Run your ceiling fans in reverse. Hot air rises, so run your ceiling fan at a slow speed in reverse (counter clockwise) to push the warm air back down to floor level. Most ceiling fans have switches that allow you to change the direction of the motor rotation. 

Take advantage of the sunny days. Open your curtains and blinds on the south facing windows through the day,and feel how that sun heats up your home! Make sure you close them again once the sun sets to keep that heat inside. 30% of heating loss in a home happens through the windows, so the thicker the curtains and the shades – the better!

Seal up leaks. Check out your walls, windows, ceilings, doors, light fixtures, outlets and switches for any escaping air. Look for things like hole and gaps. Adding simple weather stripping around your windows and doors is the easiest and cheapest way to help keep the warm air in your home. Ducts tend to get small leaks over time which allow the heated air to escape. An easy and inexpensive fix to these leaks is using metallic tape found at any home improvement store. When you are not using your chimney, make sure the flue is shut to prevent warm air from escaping.

The Bottom Line: Bundle up! It could be an expensive winter ahead when it comes to heating your home. Check with your electric company to see if they have “even billing” where you spread your winter payments out over the whole year, paying the same amount each month. For now, the first step is to find the problems around your home and identify where you could be more energy efficient.

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What To Expect From A Realtor When Selling A Home

Prepare Your Home

An experienced Realtor will know how to maximize your property value so you can receive top dollar for your home. They will identify what improvements you should make to your home to increase the amount it will sell for. They will have the name of the best inspector in your area to check on the roof, sewer, drainage, fireplace, pool, etc., and then advise you to complete the repairs or to leave as-is for the buyer. They’ll also be able to recommend the best service providers with reasonable prices: an inspector, handyman, painter, landscaper, stager, etc.

Stage Your Home

First impressions are everything. It only takes 10 seconds for a buyer to decide whether or not they love the home. Those 10 seconds start counting down as soon as the buyer steps through the front door. If you want to wow the buyer, make sure that the first thing they see makes them feel welcomed and inspired. Staging can help your place look its best during the sales period without the cost or expense of a renovation. Your Realtor will help you get your home to that point so that it makes that positive first impression among potential buyers, from the time they look at the listing photos, to the moment they walk in the door. Buyers can’t imagine themselves in your house if it’s full of your family photos or souvenirs from your vacations, so invested, good Realtors will be upfront with you on what should go into storage.

Professional Photos

Once the home is prepped and stage, it will be ready for a photoshoot. Be sure, when interviewing Realtors to hire that they offer professional photography as part of their service. Today, buyers are online searching for a home and the photos are what’s piquing a buyer’s interest in your home and prompting them to take the next step in contacting their Realtor. Your Realtor’s and connection to a professional photographer will produce images that resonate and appeal to sellers. And the more photos the better.

Determine the Price

Maybe the most important task of a Realtor is setting a fair and competitive selling price for your home that will increase your odds of a quick sale. He will create a comparative market analysis (CMA) to review comparable homes nearby that are currently on the market, pending, or have recently sold. This will give you more information on what people are willing to pay for homes that are similar to yours, so, together, you can set a competitive price. The best Realtor will avoid giving in and just saying a price that will make you, the seller, happy. He should price each home using his training, understanding of the market and comparable sales.

Market Your Home

Your Realtor should blow away others in this arena. She should know how to get the word out using every available social media platform as well as any marketing channels that are available. Check out her website and social accounts. If she is lacking, maybe she isn’t the one for you. The photos should be phenomonal as well as videos.

Negotiating and Closing the Deal

The job of a Realtor is to get the most money for their clients home in the least amount of time. His ability to negotiate relies heavily on the local and national real estate market. More often than not though, the purchasing and selling of a home occurs quickly and must make decisive financial decisions during the negotiation process.  He should know you, the seller well and be aware of what is and is not negotiable. If an offer is made, he should let any other parties that have been interested to give them a last chance to make an offer. He will guide you through all of the paperwork and steps that need to be completed in the closing process and be there to hand over your keys to the new owner. 

The Bottom Line: Selling a house involves a lot of work. There are so many little details and loose ends that must be taken care of. It is crucial that you interview and find the best Realtor in your area that can not only sell your home faster and make you more money, but they can also make the selling process much less stressful.

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Title Insurance Myths

MYTH: Nobody needs title insurance

Everyone needs title insurance. You may think you know the entire history of the house you’re purchasing, but it’s impossible to know everything. Title insurance protects your right to the property in the event that a previously unknown heir claims ownership of the property if it is later revealed that the “sellers” were not the rightful owners, or if liens against the property resurface. If you have an owner’s title insurance policy, you will not be responsible for paying any of the fees associated with protecting your right to the property, should these types of issues arise.

MYTH: New construction homes don’t need title insurance

Your home could be brand new, but the land on which the house is built isn’t. Chances are, the land had several previous owners before construction began. Buying property on such land opens you up to certain risks tied to ownership issues from previous owners.

Disputed wills, easements, and property liens are just a few of the issues common to land ownership. You could get caught in between the mess and end up losing your resources or, worse still, your new property as well. Title insurance is crucial even for a new home and should be among your list of priorities during the closing process.

MYTH: If no one challenges ownership, then the title policy is a waste

At the closing, when you purchase a title insurance policy, the closing company does the bulk of the work behind the scenes. The title company goes through many steps to make sure that everything is in place by that time, including conducting a comprehensive title search and identifying any potential issues. The team investigates the entire history of the property to ensure that you, the buyer, will be aware of any problems that will need to be addressed before closing. By the time the closing comes around, the title company has completed a great deal of research and legwork for you.

MYTH: Title insurance offers only minimal protection

When you purchase a home, you receive the “title” to the property. This title is your legal right to own it. Early in the home buying process, a title search is conducted to review the history of the property and uncover any issues that could limit your right to ownership. Even after the most meticulous search of public records, there can be hidden title defects, such as tax liens, forged signatures, claims by ex-spouses, and recording errors. These title defects can remain undiscovered for months or even years after you purchase the home.

MYTH: Title insurance is the same thing as homeowner’s insurance

Homeowners insurance protects you so you have the resources to pay for any damage that might occur to your property. Title insurance protects you from anyone else claiming your home is theirs or for some prior owner’s back taxes or encumbrances or any other real property dispute

Title First Agency: Dedicated to innovation and passionate about service, Title First Agency is your comprehensive, nationwide resource for title and real estate settlement services. Headquartered in Columbus, Ohio, Title First has branch offices throughout the Midwest and a robust virtual partner network throughout the country. Title First got its start in 1956 as an affiliate of a local law firm and has since emerged as one of the largest independent title agencies in the nation. Proudly servicing Realtors, lenders, builders, developers, law firms, buyers and sellers, Title First is equipped to serve your residential and commercial title and settlement needs.

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Beware of Wire Fraud

Wire fraud is a cybercrime not just limited to real estate—it can occur anytime someone is “wiring” money, aka transferring it electronically to another person or entity. In real estate, it can occur when a scammer poses as your Realtor, lawyer, or a title company representative, then convinces you to wire your down payment to their account, never to be seen again.

Mortgage wire fraud relies on a complicated hacking technique called phishing. In a phishing scam, a hacker uses fake emails, phone numbers or websites to impersonate someone you trust. They often use an email address or phone number that looks like the one your real estate agent or lender uses. These emails and texts can look authentic and even contain personal information that only someone you know would have. Of course, the scammer phishes your personal information out of your agent’s inbox beforehand.

Another technique used is called “spoofing” to make themselves seem more legitimate. Spoofing occurs when a scammer uses special software to mimic your agent or lender’s phone number or email. When a scammer calls or emails you from a spoofed account, it can look exactly like you’re talking to someone you trust.

The goal of mortgage wire fraud is to get your closing costs into an account that the scammer owns. The scammer may tell you that there’s been a last-minute change in their banking procedures. They might also tell you that they sent the wrong address the first time.

The truth is that the address the scammer gives you will go straight into their pockets. Once you initiate a wire transfer, it’s very difficult to get your money back. Mortgage wire fraud can leave you thousands of dollars in debt and delay your closing.

The Bottom Line: Buying and selling a home is an exciting time, but there can be pitfalls for unsuspecting consumers. Watch this video for four tips to protect your money and advice for what to do if you’ve been targeted by a scam.

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3 Ways to Get the Most Out of Your Mortgage

If you’re looking to purchase a new home, you’re probably going to need to get a mortgage. Mortgages are home loans that provide you with the upfront capital to purchase your home. In return, you’ll pay off the balance of the loan, along with interest, taxes, and insurance (known as the mortgage premium), over the course of time. 

Just like a credit card, a mortgage’s interest rate varies from borrower to borrower and lender to lender. Lenders assign interest rates based on their lending standards, your credit score, the current market, and a number of other factors. Terms can range from extremely favorable to jaw-droppingly expensive. 

Whether you’re looking to get the most favorable mortgage terms possible, or want to optimize an existing mortgage, you’ve come to the right place. Read on to learn 3 ways to get the most out of your mortgage.

Pay Attention to APR 

Looking to buy a home? There are a lot of different elements that go into home loans. It’s not just a matter of loan amount and interest rate; a mortgage includes taxes, premiums, closing costs, and more. This total amount sits under the umbrella of a single term: annual percentage rate, or APR. 

APR is the yearly rate of interest and other additional costs associated with your loan payment. For instance, a mortgage with an APR of 10% means you’ll be paying an additional 10% of your loan amount in fees each year. 

Here’s another thing to know about APR: it comes in two different forms. 

Fixed APR 

A fixed APR has a single rate for its lifetime. Your APR will remain the same throughout the entirety of your loan, regardless of changes in the market . 

Variable APR 

A variable APR, also known as an adjustable rate APR, is tied to an index, like the prime rate. If the associated index goes up, as does your APR. If it goes down, your APR does, too. 

Mortgage lenders know that many borrowers aren’t aware of the difference between APR and interest rate. They take advantage of this mistake by advertising mortgage rates with extremely low interest rates. What they don’t advertise is that the other factors that determine APR, like premiums, are extremely high, making the loan unfavorable. 

Don’t get fooled by a low interest rate; always look at APR for the full picture. 

Explore Refinancing Options 

If you’d like better terms on an existing mortgage, it may be time to look into refinancing. Through refinancing, a borrower can take out a new mortgage that both pays off the existing mortgage and offers them different  financial benefits, whether that may be lower interest rates, better payment terms, or even cash-out options. 

There are a few different ways to refinance your home. 

Rate and Term Refinance 

Rate and term refinancing is the most common type of refinancing. A borrower takes out a new loan that has different rates or terms than their original loan. They may be left with a new mortgage payment that has a lower interest rate, better monthly payment, or offers them other financial savings. 

Borrowers may opt for a rate and term refinance for a number of different reasons. The most common is a change in the market. When interest rates go down, those with fixed interest rates may refinance in an attempt to benefit from the more borrower-friendly market. Others may choose to refinance because they’ve made significant changes to their finances or credit score and believe that could earn them more favorable terms. Lastly, some may refinance to free up capital that allows them to meet other financial demands. 

Cash-Out Refinancing 

Has your home increased in value? If so, you may be able to take advantage of cash-out financing. Cash-out refinancing allows borrowers to utilize the new equity in their home to free up cash, in return for a higher loan amount. For instance, a borrower whose home has increased in value by $100k may opt to take the $100k in equity out of their home, and in turn they will owe $100k more on their refinanced loan. 

Cash-In Refinancing 

This type of refinancing allows a borrower to pay a significant portion of their loan down in a lump payment and, in turn, receive more favorable terms. 

Consider a Reverse Mortgage

Are you concerned about having enough funds to make it through retirement? It’s a common problem for many seniors. Come retirement age, they find themselves pinching pennies and worrying about how they might support themselves through the next few decades of their lives. Fortunately, there’s a type of mortgage designed exactly for this concern, known as a reverse mortgage. 

A reverse mortgage, also known as a home equity conversion mortgage, is a type of mortgage that allows you to leverage the equity in your home to free up cash to pay for virtually any expense.  

Unlike cash out refinancing, a reverse mortgage doesn’t require your home to have gone up in value in order to access capital. Istead, it’s a federally insured program that allows you to withdraw equity from your home—typically, in tax-free income. Reverse mortgages are also different from cash-out refinancing in that they don’t require monthly repayment. While payments are allowed, they aren’t required until you sell your home, vacate the property, or pass away. 

In order to qualify for a reverse mortgage, you must meet the following requirements: 

+Age 62 or older

+Own at least 50% equity in your home

+Occupy the home as your primary residence

+Live in a single-family home, two to four-unit property, townhouse, or FHA-approved condo

+Have sufficient income or assets to cover property-related expenses like property taxes and mortgage insurance

Mortgages are a decades-long commitment. It’s important to make sure that the mortgage you choose suits your needs and enables you to live the life that you want to live. Fortunately, there are many options to find the right home loan or modify the terms of your current mortgage for a more favorable arrangement. Follow these tips to get the most out of your mortgage. 

Matt Casadona has a Bachelor of Science in Business Administration, with a concentration in Marketing and a minor in Psychology. He is currently a contributing editor for 365 Business Tips. Matt is passionate about marketing and business strategy and enjoys the San Diego life, traveling and music.

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Title Insurance Importance

What is Title Insurance?

Title insurance is an insurance policy or contract issued by a title company to protect the purchaser, owner or lender against a loss that may arise by reason of a defect in the ownership or interest in real property. In addition, title insurance companies agree to defend an owner or lender in court if there is an attack on the title of an insured property. 

Title insurance is different from other types of insurance in that it protects you, the insured, from any loss that may occur from matters or defects in the past that affect your property. Other types of insurance (such as auto insurance, life insurance or health insurance) cover you against losses that may occur in the future. Title insurance does not protect against a defect that may originate after your closing.

There are two basic types of title insurance policies:  Owner’s Title Insurance and Mortgagee’s Title Insurance.

An owner’s title insurance policy protects the owner’s interest as the buyer or owner of the property. As an owner, you want to have the same assurance as the lender that the investment you have made cannot be lost because of a problem or defect with the title. Since most property owners mortgage or borrow money at the time of purchase or during ownership, the lender can be expected to request protection of its investment against loss. Lenders know that many things can cause loss of title or that expenses are incurred while defending an attack; they insist upon a mortgage title insurance policy to protect their loan secured by the property.

Bottom Line. Why?

Errors in public records

To err is human, but when it affects your homeownership rights, those mistakes can be devastating. Clerical or filing errors could affect the deed or survey of your property and cause undo financial strain in order to resolve them.

Unknown liens

Prior owners of your property may not have been meticulous bookkeepers — or bill payers. And even though the former debt is not your own, banks or other financing companies can place liens on your property for unpaid debts even after you have closed on the sale. This is an especially worrisome issue with distressed properties.

Illegal deeds

While the chain of title on your property may appear perfectly sound, it’s possible that a prior deed was made by an undocumented immigrant, a minor, a person of unsound mind, or one who is reported single but in actuality married. These instances may affect the enforceability of prior deeds, affecting prior (and possibly present) ownership.

Missing heirs

When a person dies, the ownership of his home may fall to his heirs, or those namedwithin his will. However, those heirs are sometimes missing or unknown at the time of death. Other times, family members may contest the will for their own property rights. These scenarios — which can happen long after you have purchased the property — could affect your rights to the property.

Forgeries

Unfortunately, we don’t live in a completely honest world. Sometimes forged or fabricated documents that affect property ownership are filed within public records, obscuring the rightful ownership of the property. Once these forgeries come to light, your rights to your home may be in jeopardy.

Undiscovered encumbrances

When it comes to owning a home, three can be a crowd. At the time of purchase, you may not know that a third party holds a claim to all or part of your property — due to a former mortgage or lien, or non-financial claims, like restrictions or covenants limiting the use of your property.

Unknown easements

You may own your new home and its surrounding land, but an unknown easement may prohibit you from using it as you’d like, or could allow government agencies, businesses, or other parties to access all or portions of your property. While usually non-financial issues, easements can still affect your right to enjoy your property.

Boundary/survey disputes

You may have seen several surveys of your property prior to purchasing, however, other surveys may exist that show differing boundaries. Therefore, a neighbor or other party may be able to claim ownership to a portion of your property.

Undiscovered will

When a property owner dies with no apparent will or heir, the state may sell his or her assets, including the home. When you purchase such a home, you assume your rights as owner. However, even years later, the deceased owner’s will may come to light and your rights to the property may be seriously jeopardized.

False impersonation of previous owner

Common and similar names can make it possible to falsely “impersonate” a property owner. If you purchase a home that was once sold by a false owner, you can risk losing your legal claim to the property.

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