Blog – Home Closing 101 https://www.homeclosing101.org Find. Buy. Protect. Mon, 14 Aug 2023 19:07:08 +0000 en-US hourly 1 https://wordpress.org/?v=6.4.3 https://www.homeclosing101.org/wp-content/uploads/2020/04/cropped-hc101-fav-1-1-32x32.png Blog – Home Closing 101 https://www.homeclosing101.org 32 32 Honest Abe Lost His Home—Twice https://www.homeclosing101.org/honest-abe-lost-his-home-twice/ Tue, 13 Feb 2024 02:07:29 +0000 http://alta.1440n.net/?p=163 Abraham Lincoln was born in a one-room cabin in Kentucky. His father paid $200 for the cabin and 300 acres. It wasn’t much, but it was home. However, the Lincolns didn’t have the right papers and someone else had a better claim to the land.

At the age of three, Abe’s family packed up and moved. Four years later, Lincoln’s father had to go to court to prove ownership rights again. Abe’s father, Tom, won the suit, but moved his family to Indiana due to the fear of losing another property due to title issues.

The Lincoln’s losses would have been covered had Tom purchased an owner’s title insurance policy.

The same potential flaws in title exist today. A home is the largest purchase most of us make in our lifetime.

Make sure you purchase an owner’s policy and protect your investment. The option of not purchasing a policy can be devastating.

 

 

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The FAQs of Title Insurance for Homeowners – Part 2 https://www.homeclosing101.org/the-faqs-of-title-insurance-for-homeowners-2/ Mon, 02 Oct 2023 17:07:15 +0000 https://www.homeclosing101.org/?p=870 For most of us, a home is the largest investment we’ll make in our lives. To buy with confidence, get owner’s title insurance. It’s the smart way to protect your property from legal claims. To help you understand how owner’s title insurance works, here are answers to common questions.

Why should I purchase owner’s title insurance?

Owner’s title insurance protects your investment in your property from certain future legal claims regarding ownership of your property. For a one-time fee, you and your heirs* receive coverage for as long as you own your home. The owner’s policy also covers potential legal fees and court costs for settling claims covered by your policy.

What does owner’s title insurance cover?

Sometimes undiscoverable defects can come up after the title search. Under an owner’s title insurance policy, you are protected against certain undiscovered errors in the title.

Title issues include unknown:

  • Outstanding mortgages and judgments, or a lien against the property because the seller has not paid his taxes
  • Pending legal action against the property that could affect you
  • Unknown heir of a previous owner who is claiming ownership of the property

Unforeseeable title claims include:

  • Forgery: making a false document
    • For example, the seller misrepresents the identity of the person who sold the property.
  • Fraud: deception to achieve unfair gain
    • For example, someone steals your identity and either sells your house without your knowledge or consent, or takes out a second mortgage on the property and walks away with the money.
  • Clerical error: inconsistent paperwork and historical records
    • For example, an unforeseeable discrepancy in the property or fence line can cause confusion in ownership rights.

What does owner’s title insurance cost?

The one-time payment for owner’s title insurance is low relative to the value of your home. A typical title insurance policy costs around 0.5% of the home’s purchase price.

How long am I covered?

Your owner’s insurance policy lasts for as long as you or your heirs* own your property. Your life will change over time, but your peace of mind never will.

What happens at closing?

Closing is the final step in executing the homebuying transaction. It is the process that allows the transfer of ownership to occur. Upon completion of the closing process, you get the keys to your home!

Where can I get more information?

The American Land Title Association helps educate homebuyers like you about title insurance so you can protect your property rights. Check out www.homeclosing101.org to learn more about title insurance and the home closing process.

*This advertising offers a brief description of insurance coverages, products and services and is meant for informational purposes only. Actual coverages may vary by state, company or locality. You may not be eligible for all of the insurance products, coverages or services described in this advertising. For exact terms, conditions, exclusions, and limitations, please contact a title insurance company authorized to do business in your location.

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The FAQs of Title Insurance for Homeowners – Part 1 https://www.homeclosing101.org/the-faqs-of-title-insurance-for-homeowners/ Fri, 01 Sep 2023 17:48:40 +0000 https://hc101.wpengine.com/?p=776 For most of us, a home is the largest investment we’ll make in our lives. To buy with confidence, get owner’s title insurance. It’s the smart way to protect your property from legal claims. To help you understand how owner’s title insurance works, here are answers to common questions.

What is title?

Title is your right to own or use your property. Title also establishes any limitations on those rights.

What is a title search?

A title search is an early step in the homebuying process to uncover issues that could limit your rights to the property. If a title issue is discovered, most often your title professional will take care of it without you even knowing. After the title search is complete, the title company can provide a title insurance policy.

What is title insurance?

If you’re buying a home, title insurance is a policy that protects your investment and property rights.

There are two different types of title insurance: an owner’s policy and a lender’s policy.

  1. An owner’s policy is the best way to protect your property rights. Either the buyer or seller may pay for this policy. Ask your title professional how it’s handled in your area.
  2. A lender’s policy is usually required by the lender and only protects the lender’s financial interests. The buyer typically pays for this policy, but that varies depending on geography. Ask your title professional how it’s handled in your area. 

Why should I purchase owner’s title insurance?

Owner’s title insurance protects your investment in your property from certain future legal claims regarding ownership of your property. For a one-time fee, you and your heirs* receive coverage for as long as you own your home. The owner’s policy also covers potential legal fees and court costs for settling claims covered by your policy.

Where can I get more information?

The American Land Title Association helps educate homebuyers like you about title insurance so you can protect your property rights. Check out www.homeclosing101.org to learn more about title insurance and the home closing process.

*This advertising offers a brief description of insurance coverages, products and services and is meant for informational purposes only. Actual coverages may vary by state, company or locality. You may not be eligible for all of the insurance products, coverages or services described in this advertising. For exact terms, conditions, exclusions, and limitations, please contact a title insurance company authorized to do business in your location.

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7 Reasons Why Every Homebuyer Needs Owner’s Title Insurance https://www.homeclosing101.org/7-reasons-why-every-homebuyer-needs-owners-title-insurance-part-1/ Mon, 14 Aug 2023 17:14:49 +0000 https://www.homeclosing101.org/?p=871 Buying a home is an exciting and emotional time for many people. To help you buy your home with more confidence, make sure you get owner’s title insurance. Here’s why it’s so important for you.

1.    Protects Your Largest Investment

A home is probably the single largest investment you’ll make in your life. You insure everything else that’s valuable to you—your life, car, personal property, health, pets, jewelry, etc.—so why not your largest investment? For a one-time fee, owner’s title insurance protects your property rights for as long as you or your heirs* own the home.

2.    Reduces Your Risk

If you’re buying a home, there are many hidden issues that may pop up after purchasing it. Getting an owner’s title insurance policy protects you from legal title discrepancies. Don’t think it will happen to you? Think again. Here are just some of the many situations that you’ll be protected from if you have owner’s title insurance.

Unforeseeable title claims, such as:

  • Forgery: making a false document
    • For example, the seller misrepresents the identity of the person selling the property.
  • Fraud: deception to achieve unfair gain
    • For example, someone steals your identity and either sells your house without your knowledge or consent, or takes out a second mortgage on the property and walks away with the money.
  • Clerical error: inconsistent paperwork and historical records
    • For example, an unforeseeable discrepancy in the property or fence line causes confusion in ownership rights.

Unexpected title claims, such as:

  • Outstanding mortgages and judgments, or liens against the property because the seller didn’t pay required taxes
  • Pending legal action against the property that could affect your ownership
  • An unknown heir of a previous owner who is claiming ownership of the property

3.    You Can’t Beat the Value

Owner’s title insurance is a one-time fee that’s very low relative to the value it provides. It typically costs around 0.5% of a home’s purchase price.

4.    Covers Your Heirs

As long as you or your heirs own your home, owner’s title insurance protects your property rights.

5.    Nothing Compares

Home insurance and warranties protect only the inside of the home. Getting owner’s title insurance ensures your family’s property rights stay protected.

6.    8 in 10 Homebuyers Agree

Each year, more than 80% of America’s homebuyers choose to get owner’s title insurance.

7.    Peace of Mind

If you’re buying a home, owner’s title insurance lets you rest assured, with the knowledge that you won’t be stuck with certain existing debts or legal problems once you’ve closed on your new home.

More Homebuyer Tips & Information

The American Land Title Association helps educate homebuyers like you about title insurance so you can protect your property rights. Check out www.homeclosing101.org to learn more about title insurance and the home closing process.

*This advertising offers a brief description of insurance coverages, products and services and is meant for informational purposes only. Actual coverages may vary by state, company or locality. You may not be eligible for all of the insurance products, coverages or services described in this advertising. For exact terms, conditions, exclusions, and limitations, please contact a title insurance company authorized to do business in your location.

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The Cost of Title Insurance is Worth the Investment https://www.homeclosing101.org/the-cost-of-title-insurance-is-worth-the-investment/ Wed, 02 Aug 2023 01:07:59 +0000 http://alta.1440n.net/?p=167 Whenever there’s an article in the news about title insurance, all too frequently there is criticism about the cost. This perception occurs because there are fewer claims with title insurance compared to other forms of insurance. The higher percentage of claims an insurance company pays should not be equated with the value and cost of the policy. This is especially true with title insurance.

Most types of insurance cover incidents that may occur in the future, which is the case with health, life, auto and homeowner’s insurance. The cost of these policies is based on the insurers’ estimation of how much they will likely pay out in claims over a given period, plus administrative costs and a reasonable profit. The volume of claims is typically high with these types of insurance.

Title insurance, on the other hand, is based on loss prevention, which means that a much larger percentage of the premium dollar is spent preventing title problems from occurring. These upfront costs cover searching, identifying and eliminating risks that could result in a future claim.

A typical title search involves searching the public records, including visits to the offices of recorders or registers of deeds, clerks of courts and other officials, and the company’s own title plant. Title professionals look for such things as second or third mortgages, judgments, liens, street and sewer system assessments, special taxes and levies, and numerous other matters. No other line of insurance does this level of due diligence before issuing a policy.

Over the long term, title insurers pay fewer claims than other insurers, but their operating expenses are much higher because of these upfront costs. To compare, operating expenses for property and casualty companies, which issue auto and homeowners insurance, is less than 30 percent of revenues. The expense ratio for title insurers averages 90 percent.

Another reason some mistakenly believe that title insurance costs are high is because they don’t fully understand its value. Title insurance protects the single largest financial investment most people make. One out of every three residential real estate transactions has an issue with the title, which is usually resolved by title professionals before the buyer closes.

When there is a claim, it is often due to a title defect that was undetected during the title search. The most common problems resulting in title claims are the result of fraud and forgery. And, when there is a loss, it is usually significant—sometimes in the hundreds of thousands of dollars.

An owner’s policy, which can be obtained in addition to a loan policy, remains in effect for as long as the policyholder (or their heirs) owns the property that is insured. A claim could actually be filed 50 or 100 years after the policy was issued. Also, owner’s policy covers legal expenses involved in defending the title on behalf of the homeowner.

The cost for title insurance is a one-time fee, as opposed to other lines of insurance that charge a monthly, quarterly or annual premium over the life of the policy. When you consider the size of the asset being protected, title insurance is probably the best value among the majority of costs associated with closing on a new home.

As an example, the cost for an owner’s policy for a home in Washington, D.C., listed at $474,000 and assuming a 20 percent down payment, is around $1,100. Over the average duration of homeownership, that spreads out to about $85 annually or about $7 per month. The longer you own your property, the overall cost decreases even more—yet the protection of your owner’s policy stays the same for as long as you own the property.

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Closing Time: 6 Steps Every Homebuyer Should Expect https://www.homeclosing101.org/closing-time-6-steps-every-homebuyer-should-expect/ Tue, 09 May 2023 17:35:01 +0000 https://hc101.wpengine.com/?p=592 Your long home-buying journey is almost over. You found the home you love, the seller agreed to your offer and now it’s time for closing. Of course, there’s a lot to think about right now, and the last thing you want is something­ to go wrong. So make sure you work with an experienced closing agent to help ensure the details come together and everything runs smoothly.

As soon as the seller accepts your offer, the behind-the-scenes work begins. You can expect closing to happen within 30 to 90 days. 

1.   Select a Closing Agent

If you are working with a real estate agent, with your permission, he or she may place an order with a closing agent as soon as your sales contract is accepted. The closing agent can be a title company, an escrow company or a settlement company.

Most homebuyers rely on their real estate agent to select a closing agent—someone they work with regularly and know to be professional, reliable and efficient. However, you can choose your own closing agent if you wish. The closing agent will oversee the closing process and make sure everything happens in the right order and on time, without unnecessary delays or glitches.

2.   Draw up an Escrow Agreement

First, a contract or escrow agreement is drafted, which the closing agent reviews for completeness and accuracy. The agent will also put your deposit into an escrow account, where the funds will remain until closing.

3.   Title Search is Conducted

Once the title order is placed, the title company conducts a search of the public records. This should identify any issues with the title such as liens against the property, utility easements, and so on.  If a problem is discovered, most often the title professional will take care of it without you even knowing about it. After the title search is complete, the title company can provide a title insurance policy.

4.   Shop for Title Insurance

There are two kinds of title insurance coverage: a Lender’s policy, which covers the lender for the amount of the mortgage loan; and an Owner’s policy, which covers the homebuyer for the amount of the purchase price. If you are obtaining a loan, the bank or lender will typically require that you purchase a Lender’s policy. However, it only protects the lender.

It is always recommended that you obtain an Owner’s policy to protect your investment. The party that pays for the Owner’s policy varies from state to state, so ask your settlement agent for guidance before closing.

5.   Obtain a Closing Disclosure

Your lender must provide a Closing Disclosure to you at least three days prior to closing. Your lender may also have a closing agent provide the Closing Disclosure to you three days before you close your transaction.

If you or your lender makes certain significant changes between the time the Closing Disclosure form is given to you and the closing, you must be provided a new form and an additional three-business-day waiting period after receipt of the new form. This applies if the creditor:

  • Makes changes to the APR above ⅛ of a percent for most loans (and ¼ of a percent for loans with irregular payments or periods)
  • Changes the loan product
  • Adds a prepayment penalty to the loan

If the changes are less significant, they can be disclosed on a revised Closing Disclosure form provided to you at or before closing, without delaying the closing.

6.   The Finish Line: Prepare for Closing

As closing day approaches, the closing agent orders any updated information that may be required. Once the closing agent confirms with the lender and the seller, he or she will set a final date, time and location of the closing.

On closing day, all of the behind-the-scenes work is complete. While you’ve been busy packing, ordering utilities and coordinating the movers, your closing agent has been managing the closing process so that you can rest assured, knowing all the paperwork is in order. 

More Homebuyer Tips & Information

The American Land Title Association helps educate homebuyers like you about title insurance so you can protect your property rights. Check out www.homeclosing101.org to learn more about title insurance and the home closing process.

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3 Things Consumers Should Consider When Shopping for a Title Company https://www.homeclosing101.org/3-things-consumers-should-consider-when-shopping-for-a-title-company/ Wed, 05 Apr 2023 01:07:45 +0000 http://alta.1440n.net/?p=165 Purchasing a home is the single largest investment most consumers make in their lifetime. The American Land Title Association reminds consumers of the three most important things to consider when shopping for a title company.

1. The cost for title insurance varies across the United States and homebuyers need to make certain they have proper protection for their investment.

To determine title insurance policy premium costs in your area consumers should talk to a local title company.  When comparing fees, it’s important to get detailed information about what services are included in a fee to help ensure equal comparisons. In some states, the seller pays for the owner’s title insurance policy. Consumers should also consider and compare all of the associated costs. Some rates may or may not include other services provided by the title company such as conducting the closing, preparing and notarizing documents and other services. When comparing one rate to another, be sure to get detailed information on what is included in that rate, so you are comparing equally. For more information about title insurance, please visit www.homeclosing101.org.

2. All real estate is local and consumers should shop for a local title company.

Many consumers rely on their real estate agent or mortgage lender for a recommendation for a title company, however, it important that all homebuyers remember that they have the right to shop for title insurance and to choose their own title agent or company. Click here to find a title company  that can conduct your closing and issue a title insurance policy. There are many factors to consider when selecting a title insurance company, such as local expertise, service standards, market conduct and commitment to the community. Be sure to shop around and ask questions to make sure you’re comfortable with your title company.

3. Considering all of the costs of owning a home can be overwhelming and consumers should remember why their investment needs protection.

New homeowners want to focus on buying new furniture for the living room or painting walls, not worrying about having to pay a bill left behind by a previous owner. An owner’s title insurance policy helps ensure that a homeowner’s bases are covered if any ownership disputes arise. In order to make sure a homeowner has clear rights to a property, the title agent will review prior deeds or mortgages, divorce decrees, court judgments, delinquent taxes and child and spousal support payments, utility or other easements and more. This work is necessary to issue the insurance policy and often includes the cost of conducting a title search, examination, correcting errors, issuing the policy, and, frequently, the settlement or closing for consumers.

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Title Insurance Provides Needed Protection When Refinancing Mortgages https://www.homeclosing101.org/title-insurance-provides-needed-protection-when-refinancing-mortgages/ Sat, 04 Mar 2023 01:40:27 +0000 http://alta.1440n.net/?p=329 Title insurance is essential to protect homeowners and lenders against any problems affecting the title to a home. Whether a consumer is purchasing a new or existing home, or refinancing, title insurance provides an underwriting service to mortgage lenders to ensure the borrower has clear ownership rights to the property, free and clear of any other claims to ownership.

When you refinance you are obtaining a new loan, even if you stay with your original lender. Lenders will usually require a new title search and loan policy to protect their investment in the property. Homeowners don’t need to purchase a new owner’s policy. The one they bought at closing is good for as long as they and their heirs have an interest in the property.

Even if you recently purchased or refinanced your home, there are some problems that could arise with the title. For instance, a homeowner may have incurred a mechanics lien from a contractor who claims he/she has not been paid. Or, a homeowner might have a judgment placed on their house due to unpaid taxes, homeowner dues, or child support for instance. The lender needs reassurance that the title to the property they are financing is clear. Here are some other examples of items that can arise and why title insurance is important when refinancing a home:

  • Liens against the property that serve as security for the payment of an obligation (e.g., mortgage liens, judgment liens for unpaid court judgments, tax liens, state and local liens for failure to pay real estate taxes or assessments, mechanic’s liens to secure payment for improvements, liens for recovery of child support payments or, as in New York City, for unpaid parking tickets);
  • Easements that have been created by contract or arisen through use or adverse prescription (e.g., rights of way for utilities, rights acquired by neighbors because of a fence encroachment);
  • Building or use restrictions contained in a recorded plats, agreements or deeds; and
  • Rights or claims arising out of bankruptcy.

These rights may affect the use of the property or otherwise encumber the “ownership” rights of a property’s owner.  They can be placed on a property at any time, including during the time between when an original purchase mortgage is placed on the property and that mortgage is refinanced.

Depending on where you live, a discounted rate may be available. Check with your title company. You may need to provide a copy of the previous title policy.

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Why 20% of Homeowners May Not Sleep Tonight https://www.homeclosing101.org/why-20-percent-of-homeowners-may-not-sleep-tonight/ Tue, 03 Jan 2023 20:37:05 +0000 https://hc101.wpengine.com/?p=767 Each year, approximately 20% of homebuyers fail to protect themselves by not getting owner’s title insurance. Unfortunately, this leaves them exposed to serious financial risk—causing endless worry and regret.

If you’re thinking of buying a home, here’s what you need to know to protect yourself and your property rights, so you can rest assured once you’ve purchased your home.

Looking For Potential Threats

During the home-closing process, your title professional will help transition the home from the seller to you, the homebuyer, by examining public records. Generally, if a problem is discovered, the title professional works to resolve them before you purchase the home.

However, even after a title search is performed and you purchase your home, problems could arise that threaten your ownership rights. Examples include:

  • Undiscovered tax liens
  • Forged signatures in the chain of title
  • Recording errors
  • Undisclosed easements
  • Title claims by missing heirs* or ex-spouses

 Getting owner’s title insurance protects your property rights from threats like these. Here’s a real-life example of how it works.

 True Story

A family in Missouri unknowingly purchased their home from a seller who had taken out a separate $419,000 loan on the property. But this fact was not discovered during the closing process, and the family’s lender paid the seller directly instead of paying off the existing loan.

Soon, the family faced foreclosure because someone else had claim against their title. Fortunately, the family had owner’s title insurance. So the title company paid the debt and the family kept their home—and peace of mind.

This story has a positive ending, but without owner’s title insurance, the family could have faced serious costs, and even eviction.

 Protect Yourself

There are two types of title insurance: lender’s title insurance and owner’s title insurance.

Lender’s title insurance is required by most lenders and banks because it protects their loan investments. Usually, you purchase this policy as the homebuyer. If you only have a lender’s policy, where the outstanding loan is covered, your equity is not protected. Therefore, you could have your property rights taken away if someone else has claim to your home.

Owner’s title insurance is the policy that protects your property rights from legal and financial threats like those mentioned in the story you just read. That’s why millions of homebuyers each year make the smart decision to get owner’s title insurance. It’s a low, one-time fee that provides the peace of mind that every homebuyer deserves, for as long as you or your family* own your home. In many areas, the seller purchases the policy for you. Ask your title professional how it’s handled in your area.

Support and Free Information

To buy your home with confidence, you need to work with a trusted title professional. They’re the experts who will help you throughout the home closing process. They will also advise you on how to protect your property rights and avoid costly problems by getting owner’s title insurance.

For more information, ask an ALTA member or visit www.homeclosing101.org.

*This advertising offers a brief description of insurance coverages, products and services and is meant for informational purposes only. Actual coverages may vary by state, company or locality. You may not be eligible for all of the insurance products, coverages or services described in this advertising. For exact terms, conditions, exclusions, and limitations, please contact a title insurance company authorized to do business in your location

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