THE IMPORTANCE OF OWNER'S TITLE INSURANCE

There are two types of title insurance, lender's coverage and owner's coverage. Lender's title insurance protects the lender in the event their interest in the property is jeopardized by an unpaid lien or encumbrance or by a challenge to the owner's title. Lender's coverage is mandatory on most mortgage loans.

Owner's title insurance is optional. Owner's title insurance is the cheapest insurance a buyer will ever purchase. It protects the buyer's interest in the property for as long as he owns it. If someone challenges the buyer's title or if there are any liens that should have been paid off at or before closing, the title insurance company will defend the buyer's title at no cost to the buyer.

Sometimes at closing, buyers will be tempted to opt out of purchasing owner's title insurance in order to save a few hundred dollars. Many times, the loan officer or real estate agent will even encourage a buyer to forgo purchasing owner's title insurance.

We've all heard the saying “penny wise and pound foolish”. It means that some people will do anything to save a few dollars today only to end up paying a whole lot more down the line. Any buyer who chooses not to purchase owner's title insurance is being penny wise and pound foolish. Owner's title insurance, unlike most other insurance, involves a one-time premium. The amount of the premium is based on the value of the property and may vary slightly among title insurance companies. As mentioned previously, the coverage is good for as long as the buyer owns the property.

Most title insurance companies have a simultaneous issue option. If a buyer opts to purchase title insurance on the day of closing, he will receive a discount on the lender's policy. So, buyers should make sure to ask the title company or closing attorney what the simultaneous issue rate is for the title insurance company through which they write their policies. Keep in mind that if a buyer chooses not to purchase owner's coverage, he will be required to pay the full premium for the lender's policy.

Title insurance companies also offer reissue rates for refinances. Reissue rates allow a borrower to pay for title insurance on the difference between the value of the original lender's policy and their current loan amount.

Depending on the internal procedures of the title company or closing attorney, a buyer will either receive his owner's policy at the closing table or via U.S. mail a few weeks after closing. The owner's policy should be kept in a safe place along with the deed to the property as it is the only original. In most states, attorneys and title companies are only required to keep files for seven to ten years. So, if an issue arises years later, a copy of the title insurance policy may not be available from the attorney or title company because they may have already disposed of the closing file.

If it becomes necessary to file a claim, the title insurance policy contains the information needed to begin that process. Be prepared to provide the title insurance company with a detailed explanation of the claim and any supporting documentation.

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1st time Buyers...NOW is the time to buy a home

LOW AND NO DOWNPAYMENT FINANCING OPTIONS for Owner Occupant Buyers

Finding the home of your dreams is very exciting. When you walk into a home and realize it's the house for you, you don't want to risk losing it because you don't having financing lined up.

Inexperienced buyers often don't know the difference between being pre-qualified and pre-approved. A pre-qualification means that a loan officer has gotten some preliminary information from the buyer and arrived at an estimate of how much the buyer can afford to borrow. A pre-qualification is worth little more than the paper upon which it is written.

A pre-approval, on the other hand, is worth a great deal for any seriously motivated buyer. The loan officer has pulled the buyer's credit report, assessed their debt to income ratio, and determined how much the buyer can afford to pay for a home and how much the mortgage company is willing to lend. Offers with pre-approval letters attached are taken much more seriously than those accompanied by pre-qualification letters.

For some buyers, coming up with a down payment presents a problem. But there are several options for buyers who have little or no money for a down payment.

RD LOANS
RD loans are for people who live in rural areas. To qualify for an RD loan, a buyer must meet certain income requirements and must live in designated areas where these loans are offered. The benefits of RD loans include:

✔ Fixed, below market interest rates
✔ No down payment required
✔ Government insured

VA LOANS
Buyers who qualify can also obtain VA loans that require no down payment. These types of loans are available to qualifying veterans and active duty military servicemen and servicewomen. VA loans feature:

✔ Fixed, below market interest rates
✔ Low fixed payments
✔ No down payments

VA VENDEE LOANS
A buyer does not always have to be a veteran to obtain a down payment free VA loan. Under certain circumstances, non-veterans can get a VA Vendee loan on VA foreclosed homes. So this is a great financing option for investors and buyers looking for their next home. The benefits of VA Vendee loans include:

✔ Low closing costs
✔ No down payments

FHA PLUS LOANS
FHA plus loans require no down payment. However, they do require financing of the down payment in the form of another loan granted along with the mortgage loan. FHA plus loans are ideal for buyers who are experiencing some financial hardship but have demonstrated the ability to make a mortgage payment. The benefits of FHA plus loans are:

✔ Assisted down payments
✔ Easy qualification requirements
✔ Closing costs are financed

Each of these programs are reserved for first time home buyers. They are designed to give buyers who might otherwise be unable to qualify for other traditional loan programs an opportunity to buy a home. The government realizes the importance of homeownership to a vital economy and has made it much easier for people to achieve the dream of homeownership by implementing these down payment assistance programs.

For more information go to our buyer website.