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What is Title Insurance and Do I Need It?

by Allyson Hoffman

When you buy a Northern Illinois home, you are given a title.  The title is your right to possess and use the property.  A very important fact is that it may not be the home seller who owns the title.  If a bank has a mortgage on the property, they may own an interest in it. Or if someone has done work on the house and didn’t get paid, they could have a lien against it.  

How can you be sure that when you purchase a home that the title has no problems that go with it? And that the seller truly does own the property? These problems could end up being a financial loss to you. That is what the title search and title insurance is for. 

A title search will reveal if someone other than the owner of the property owns the title. This search can be done by examining public records to look up the history of property ownership. While you can easily do your own title search, if you are obtaining a loan to purchase the property, the lender will require that a qualified third party do the title search. The title search shows not only limitations on the use of the property and rights others may have in the property, but also liens or monetary obligations that are outstanding against the property.  

Title insurance is different than the standard insurance where you are covered in case of a future event. For example, if you get car insurance you are insured in case you have an accident, you buy health insurance in case you get sick.  Title insurance is different as it covers events relating to the title that have already happened. It does not cover anything that happens to the title after the date of issuance. For example if you have liens filed against the property for taxes that you have not paid, your title insurance policy is not going to help you. But, if the lien is for taxes not paid by someone who owned the house before you, then you may have coverage under your title policy. 

Title companies can do a title search on the property before issuing the policy to see if there are any problems with the title. This search is done to minimize the risks of offering insurance. The search can turn up problems with deeds, wills, outstanding mortgages, judgements, and tax liens on the property.   When these problems are not cleared, they will often be listed as exceptions to the policy’s coverage. You then would have to make the decision on whether the property was something you wanted or not, knowing the problems. 

Image courtesy of Monam/Pixabay.com

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No Surprises on Closing Day

by Allyson Hoffman

The home buying process can be stressful and confusing if you are not familiar with the steps and costs involved in this life changing transaction. A common aspect sometimes overlooked by buyers and sellers is the specifics and the amounts involved with closing costs.

If you are aware of these specific costs and budget for them, they won’t surprise you on closing day and cause you financial stress.

Below is a guide to some of the more standard costs that you may be faced with on closing day.

  • Loan Origination Fee or Points: These are the fees charged by the lender for generating your loan.
  • Broker Fee: These fees are occasionally combined into the Loan Origination Fee.
  • Credit Report: Lenders may require this fee up front to obtain and review your credit history. (Approx. $21 - $60)
  • Appraisal Fee: This fee is normally non-refundable and will vary depending on the value of the home.
  • Inspection Fee: Fees paid to have a Certified Home Inspector evaluate the structural and mechanical condition of the home.
  • Title Search: This search will provide verification that the seller owns the house you are buying.
  • Title Insurance: This fee insures against losses as a result of any title defects.
  • Prepaid Interest : To pay up the mortgage interest to the first of the following month.
  • Mortgage Insurance: Insurance to protect the lender in the event that the borrower (mortgagor) is unable to repay the loan.

These are some of the most common costs involved with closing. Once you have applied for your loan, the lender will provide you with a Good Faith Estimate of what they anticipate the closing costs to be.

Be sure to do your homework and ask extensive questions about these items and your closing will go much smoother and uneventful on closing day.

For more Home Finance information, visit my Finance Information page or Contact Me should you require additional information.

 

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A Guide to Your Real Estate Closing Costs

by Allyson Hoffman

The process of purchasing a home can be overwhelming if you are not familiar with all the steps and costs involved in a real estate transaction. The most common costs that tend to be overlooked by buyers and sellers are a bundle of fees called closing costs.

It is important to be aware and budget for these costs so you are not surprised on closing day and possibly fall short within your finances.

Below is a guide to some of the more standard costs that you may be faced with on closing day.

  • Loan Origination Fee or Points
    Fees charged by the lender for generating your loan.
  • Broker Fee
    These fees are occasionally combined into the Loan Origination Fee.
  • Credit Report
    Lenders may require this fee up front to obtain and review your credit history. (Approx. $21 - $60)
  • Appraisal Fee
    This fee is normally non-refundable and will vary depending on the value of the home.
  • Inspection Fee
    Fees paid to have a Certified Home Inspector evaluate the structural and mechanical condition of the home.
  • Title Search
    This search will provide verification that the seller owns the house you are buying.
  • Title Insurance
    This fee insures against losses as a result of any title defects.
  • Prepaid Interest
    To pay up the mortgage interest to the first of the following month.
  • Mortgage Insurance
    Insurance to protect the lender in the event that the borrower (mortgagor) is unable to repay the loan.
  • Administration Fee

Your real estate agent will be able to give you a rough estimate of some of these costs, however once you have applied for your loan, the lender will provide you with a Good Faith Estimate of what they anticipate the closing costs to be.

Familiarize yourself with these terms, ask your real estate agent questions and budget for these fees on closing day.

For more Home Finance information, visit my Finance Information page or Contact Me should you require additional information.

Image courtesy of 401kcalculator.org/Flickr.com

Displaying blog entries 1-3 of 3

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Allyson Hoffman
RE/MAX Villager
1245 Waukegan Road
Glenview IL 60025
847-310-5300
Fax: 847-400-0881

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Allyson Hoffman
RE/MAX Villager
1245 Waukegan Road
Glenview, IL, 60025

(847) 310-5300
[email protected]

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