Title Insurance - Is
It Worth the Extra Expense?
Likely, the biggest investment you will make is purchasing a
home. In the State of Georgia, determining the rights and interests to
real property is the responsibility of the
closing attorney who represents the lender.
Let's start with the basics but HANG WITH ME! This gets
really interesting at the end, but I need to review the basics first.What is title insurance?
Title is the paperwork for the ownership of property. Names on
the title change as the property is sold. The title company hired by the
attorney searches the title (or ownership) history of the property. Through its
research, the title company can almost always identify any title problems and
clear up these problems before you close on the property; however, sometimes
they miss something in the chain of title and that is where insurance comes in
play. Sometimes the problems include:
· Defective title —
"Defective title" covers any number of problems with the title to
your home. It can even include a "contested title". Defects are rare,
but they can be very difficult to get rid of, making the property inaccessible,
unbuildable, or unsaleable. Any number of other complex problems define
· Contested title — This happens when
someone who owned or even lived in the home before you claims to still have
ownership. If this happens, the title insurance company will defend your title
and the process will cost you nothing.
REQUIRED: Lender’s title
The lender requires you get LENDER'S title insurance that
protects the mortgage balance.
OPTIONAL: Owner’s title insurance
The OWNER'S TITLE protects your interest in the property and it
can vary in protection and cost. Here is the interesting part for the financially-minded: Attorneys are legally obligated to quote
STANDARD TITLE INSURANCE pricing unless they have permission within their forms
to quote an ENHANCED TITLE INSURANCE.
So I’m guessing you know what form most likely is include in their
Here is the only significant between the
STANDARD TITLE INSURANCE covers the equity between the purchase price
and loan amount at the time of purchase.
ENHANCED TITLE INSURANCE covers the house’s appreciation over a period
of five(5) years up to 150% of face value.
The ENHANCED policy sounds really good until you read that
sentence again. Five(5) years, not 15 years or 30 years, or even 7 years
(the average length of home ownership), is what they are covering extra with a significant jump in price. ASK
and comparison check before you agree to your new policy. If the State requires
STANDARD TITLE INSURANCE be quoted, that might be reason to pipe up
with the questions and shop carefully.
**And here is my
CMA - I am not an attorney and this is not legal advice. If you want more
information about title policies, search up
title insurance companies or get quotes for both policies yourself.
Teaching the 3rd Grade
Recently I had the distinct pleasure of participating in Career Day at our local elementary school. I started the lesson with self-employment. I explained, while it is nice being your own boss and having a flexible schedule, your success will directly reflect in your pay check and your reputation within the community.
It is difficult to properly convey the excitement of compound interest when your audience is eight-years-old. I was competing for their attention with police officers, firefighters, and marketing directors (who had lots of gadgets). Totally unfair!! So, instead, I reminded them, that though they may not want to be a loan officer, they may work with one when they want to own a home. They seemed to enjoy looking a house photos and discussing prices. We generally discussed how to buy a home too.
Finally, I explained the LIFE LESSON I wanted them to always remember, long after Career Day was over. (In the photo, that's what is highlighted on the board in yellow.) Maybe you know this lesson?
If your outgo exceeds your intake,
then your upkeep will be your downfall.
I think some of them understood our discussion and all of them wrote it down. I'm hopeful that a seed of financial knowledge has been planted on Career Day. Have a fantastic week! Need help on a mortgage? Grab my app at http://NewThresholdMortgage.com
Whether you're anticipating a total solar eclipse or a future home, both require preparation to get what you want out of the moment and save yourself from future headaches.
Here are two scenarios where I typically offer advice when given the time (61-90 days) to make the loan happen.
You're self-employed.; Move the money you are using for the purchase of a home to your personal account. If you have down payment in your business account, you can use it; however, the lender will want to "source" the funds in your business account(s). This means if there is anything private, like account numbers or client names in the bank statements, you may be revealing more than you desire. By having the funds transferred to your personal account more than 60 days before you go to underwriting, lenders can stay out of your business.
You're getting a gift for the down payment. If they love you enough to give you the money, perhaps they trust you enough to give that money 61 days ahead of underwriting. Of course, gifts are allowed on many loan programs if the transfer is documented and you have a gift letter; however, if the funds are already in your account for two months, the money is no longer considered a gift. This actually improves your qualifications in underwriting because a loan using your own funds for the down payment is considered a less risky than a loan with gift funds. If it is yours for 60+ days, it is no longer a gift.
As a last tip, I offer Fully Underwritten Loans WITHOUT a contract. In other words, we can turn your offer into the equivalent of a full cash offer pending the appraisal and title work. This is a powerful option at your disposal for those hard to obtain homes. Please let me know if I can help you purchase a home in Georgia.
*Eclipse photo taken near Dillon, GA on August 21,2017 using Canon Rebel T6, 300mm lens.