Homeowner Resources

7 REASONS WHY EVERY HOMEBUYER NEEDS OWNER’S TITLE INSURANCE

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.

Closing Time: 6 Steps Every Homebuyer Should Expect

Get owner’s title insurance and buy your home with confidence

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.

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.

Here’s a review of many of the common fees associated with real estate transactions. These fees are itemized on a closing disclosure form which your lender or escrow officer can review with you!

Buyer’s Typical Costs:

Origination: The fee the lender and any mortgage broker charges the borrower for making the mortgage loan. Origination services include taking and processing your loan application, underwriting and funding the loan, and other administrative services.

Points: Points are a percentage of a loan amount. For example, when a loan officer talks about one point on a $100,000 loan, this is 1 percent of the loan, which equals $1,000. Lenders offer different interest rates on loans with different points. You can decide you don’t want to pay or receive points at all. This is a zero-point loan. You can pay points at closing to receive a lower interest rate. Alternatively, you can choose to have points paid to you (also called lender credits) and use them to cover some of your closing costs.

Underwriting: Paid to the lender, this fee covers the cost of researching whether or not to approve you for the loan.

Appraisal: This charge pays for an appraisal report made by an appraiser.

Credit report: This fee covers the cost of a credit report, which shows your credit history. The lender uses the information in a credit report to help decide whether or not to approve your loan and how much money to lend you.

Flood determination: This is paid to a third party to determine if the property is located in a flood zone. If the property is found to be located within a flood zone, you will need to buy flood insurance. The insurance is paid separately.

Home inspection: Fee to verify the condition of a property and to check for home repairs that may be needed before closing.

Lender’s title insurance: The cost of the lender’s policy, which protects the lender’s investment.

Recording fees: The buyer usually pays the fees for legally recording the new deed and mortgage at the county auditor’s office.

Homeowner’s insurance premium: This insurance protects you and the lender against loss due to fire, windstorm, and natural hazards. Lenders often require the borrower to bring to the settlement a paid-up first year’s policy or to pay for the first year’s premium at settlement.

Mortgage insurance premium: The lender may require you to pay your first year’s mortgage insurance premium or a lump sum premium that covers the life of the loan, in advance, at the settlement.

Prepaid interest: This is money you pay at closing in order to get the interest paid up through the first of the month.

Prorated property taxes: The property taxes are usually prorated by the escrow agent at closing and could be a charge or credit to the buyer depending upon what time of year the transaction closes.

Settlement: This fee is paid to the settlement agent or escrow holder. It is customarily split 50/50 between the buyer and seller.

Seller’s Typical Costs:

Owner’s title insurance: The cost of the owner’s policy, which protects the homeowner’s investment for as long as they, or their heirs, own the property.

Settlement: This fee is paid to the settlement agent or escrow holder. It is customarily split 50/50 between the buyer and seller.

Excise (transfer) tax: This tax is collected in some localities whenever property changes hands, can be quite large and are set by state and/or local governments.

Real estate commission: This is the total dollar amount of the real estate broker’s sales commission, which is usually paid by the seller. This commission is typically a percentage of the selling price of the home.

WHATCOM COUNTY LOCAL SERVICES

If you are buying real estate, it’s important to be on the lookout for wire fraud attempts. “Bad Actors” are criminals who pretend to be a lender, real estate broker, title company team member or other trusted business professional. They contact real estate buyers, via email or phone call,  to give false wiring information in an attempt to steal funds. This video shows ways to avoid having wire fraud happen to you.

For more information on how to stop real estate wire fraud, visit Welcome! – Coalition to Stop Real Estate Wire Fraud (stopwirefraud.org)