Title Insurance

Explaining Title Insurance

Most people understand what a title is. It’s a claim to ownership. Owning your own home means you have rights to the property and you can modify it as you see fit.

What is a Title?

A title is a document given to the owner of a house. It shows the property legally belongs to the owner and there are no outstanding claims or liens on it or any fraud or error in the history of the ownership. It also shows any non-ownership rights, like easements for example. Common easements are those put in place for utilities (company access) or driveways (neighbor access).   

What is Title Insurance?

Title insurance comes with the title of the house. It is a way to protect yourself from financial loss and related expenses if there is a defect in the title that is covered by the policy.

Title insurance differs from other types of insurance in that there are no monthly payments required. There is just a one time premium that’s paid at closing.

There are several ways title insurance can help you.

For one, if work is done on the house and the homeowner refuses to pay the contractor and then sells the home, the new owner may now be liable to pay for the work. However, if the new owner has the title insurance to prove they now own the house, the contractor will be unable to come after them for the debt.

Title insurance also proves you own the home no matter what. Some sellers are not entirely honest and may try to sell the property to someone else even after it has been sold to you. When someone comes to the door with a deed saying they own your home, you will have no recourse, unless you have the insurance to back it up.

Or say you buy a home whose last owner is now deceased. You think all is well and good so you don’t bother with title insurance. Then you find out that the deceased actually left the home to a relative and they would like to claim it. You will have trouble holding on to the home unless you have the insurance.

Different Types of Policies

There are two different types of title insurance policies and it’s a good idea to know the difference between them. Real estate agents can even get confused so knowing the difference as a homeowner can help things run more smoothly.

One type of title insurance is a lender’s policy. This policy only covers mortgage lenders from unforeseen liens, defects and frauds. It does not cover homeowners.

The owner’s policy is the one that will protect the buyer if an issue occurs.

The seller or buyer will pick which insurance company they use depending on who pays for the policy.

Title insurance is not necessary but paying this one time fee can go a long way when it comes to protecting your property rights.

Buying During Coronavirus

Buying During Coronavirus

The coronavirus has affected businesses all over the world and the real estate industry is no exception.

How the Coronavirus Has Affected Buyers

The coronavirus has caused many businesses to close on a temporary or permanent basis. Now, as cities start to reopen, many still face financial uncertainty. Businesses are trying to recover from the economic impact of being closed for three months and many are opening in limited capacity to slow the spread while keeping an eye on their bottom line.

As a result, many employees are uncertain of their financial futures. They are wondering whether they will be able to return to work at all, and if they do, they are concerned that their hours or salaries may be cut.

Those that are concerned about their economic situations will be in no position to buy a house.

Lending

Lenders are hesitant to approve loans as they are wary of anyone that applies for a loan. The economic uncertainty means even those who seem to be in good shape to repay a loan today may not be so lucky tomorrow. Banks understand this and have tightened up their criteria.

Open Houses

The coronavirus has also made it more difficult to conduct open houses and to show properties at all.

Showing a property requires human contact and, with all the social distancing being enforced, people are going out of their way to stay physically separated from others. As a result, many open houses have been canceled completely (as in Washington for example). House showings are by appointment only.

Most people are not going to buy a home without being able to see it first, so the lack of open houses and showings is a major obstacle.

Housing Prices

Depending on your housing market, prices have not necessarily come down significantly, if at all. In Seattle for example the prices have not dramatically decreased for several reasons.

1)      Many first time home buyers still have secure jobs. Unemployment is worst in the labor sectors that primarily rent. The Tech industry on the whole has not experienced high unemployment. Major employers like Amazon and Microsoft are still hiring and bringing in talent from out of state and country.   

2) There is very little supply. Many sellers have “temporarily” taken their homes off the market in hopes of selling in a “hotter market” down the road. A lack of supply in the market place keeps the price up. Nationally, there are (approx.) 2 million homes on the market, compare that to the last financial crisis that had about double (4 million) the amount of homes for sale.  

Pent up Demand

The downturn caused by coronavirus may lead to an upturn when the lockdown restrictions are removed. It is expected that buyers will be flooding the market eager to make a deal and take advantage of low interest rates.

Those that are interested and able to buy should keep an eye on the market and be ready to pounce when they see the right home.

Finding your Dream Home

For most people buying a house requires some amount of sacrifices. When working within a budget, it can be hard to find a home that has everything you are looking for when considering space, location, amenities and more.

And while finding the perfect home may not be realistic, if you have a bit of time, you may be able to build a strategy that allows you to find a home that is pretty terrific. With that in mind, here are some ways you can get into the home you’ve always dreamed of.

Think of What You Need and What You Can Do Without

Start by making a list of what you absolutely need in your home and what you can do without. For instance, you may absolutely need a two car garage and a large yard for your pets. However, you may be able to do without that fourth bedroom you wanted to convert into a weight room and that patio in the back of your house.

Base your needs on your lifestyle for the next five years. You can always sell to upsize or downsize after that initial period of homeownership.

That way you won’t be paying for things you won’t be using. This will get you lower payments and more money to reinvest in your new home or pay for other things you enjoy doing.

Be on Top of the Market

The early bird gets the worm.

You may be relying on your agent to let you know when new properties you are interested pop up on the market. But remember, you and your agent are a team and there are many resources for you to see new homes on the market. Discussing the pros and cons of new listings with your partner and your agent allow you to hone in on 1) Value 2) What is truly important to you.

Therefore, you should make it your responsibility to keep on top of the latest listings. You can do this be setting up alerts on real estate listing sites or just keep hitting the refresh button when you’re sitting at your desk and logged in. Many sites update as often as every 15 minutes.

Present Yourself as an Attractive Buyer

You may think you have found your dream home, but guess what? It’s probably someone else’s dream home too. In order to ensure your seller picks you instead of all the other buyers making offers, it’s important to make yourself look as attractive as possible.

When you submit your offer, include a personal touch that will make you stand out from other buyers. Think of including a letter that lets the seller know that they are making a good choice by selling their home to you.

Your agent will guide you through what to include in your offer and how to best negotiate:

Should you attempt to lowball the sellers? Or make an offer that is close to the selling price? Should you add stipulations and requests to your offer. How do you keep the offer as “clean” as possible? 

Most of all, be sure to get preapproved. This lets the seller know you are a serious buyer with the funds to go through with the purchase.

A dream home can make your life complete. Hopefully these tips will help you find a home that is ideal for you and limit the chances of sellers going with different buyers. We wish you the best of luck finding a place you really love.

What Lender is Right for Me?

What Type of Mortgage Lender is Right for Me?

If you are thinking of buying a home, one of the most important steps you will take is finding the right lender. Before you go comparing rates and reputations, you should consider that there are different types of mortgage lenders available. This article will review the different types of mortgage lenders so you can find one that is right for you.

Banks and Mortgage Bankers

Banks are the first place most homeowners will turn to when they need a loan. Banks get their money from their own investors and customers and they can offer different types of mortgage loans to their borrowers. Many people won’t do business with any other type of lender.

Credit Unions

Credit unions are similar to banks but they are owned by account holders, also known as members. Members are required to sign up for membership with the credit union. Credit unions offer members checking, savings and retirement accounts and they provide mortgage loans as well.

Mortgage Lenders

Mortgage lenders are similar to a bank but they originate and fund their own loans. Unlike banks and credit unions, they exist solely to fund loans for real estate purposes. They get their money from banks or investors.

Another difference between lenders and banks, mortgage lenders do their own underwriting, processing and closing in house. Once the process is completed, they sell the loan to a bank or servicing company and it is up to that company or institution to collect the payments.

Mortgage Broker

A mortgage broker works as the middleman between a homeowner and a bank. They do not lend the money directly. They have access to many loan programs and lenders and take a commission when connecting lender to borrower.

If you’re credit isn’t great, a mortgage broker may be able to help you find a loan that isn’t being offered by a bank, credit union or even a lender. For this reason, mortgage brokers are ideal for those who don’t have the best financial histories.

Which Lender is Best for Me?

There is no right answer to this question. The ideal lender varies from borrower to borrower and depends on their individual situations. However, here are some things you will want to consider.

If Time is a Factor: A lender that does loans in-house may be the best option.

If Money is a Factor: Credit unions tend to offer lower closing costs and interest rates to their members.

Do You Need a Government Backed Loan: Government backed loans are loans subsidized by the government. They protect lenders against defaults on payments making it easier for lenders to offer buyers lower interest rates. Lenders and brokers are more likely to offer government backed loans as opposed to banks and credit unions.

Bad Credit: If you have bad credit or a high debt to income ratio, lenders or brokers will be more flexible than banks and credit unions.

Convenience: If you already have an account with a bank or credit union, you may choose to get a loan with them for the convenience of having all your accounts in one place.

Finding the right lender starts with determining the type of lender that is right for you. While your personal circumstances will be a factor, costs and interest rates will also come into play. Good luck finding a lender that provides you with the best service possible.