Title Insurance 101

WHAT IS TITLE INSURANCE?

Title Insurance is an indemnity contract between the insured and the insurer (Title Company) which protects against loss or damages sustained by the insured due to the condition of title being other than as insured. The Beneficiaries of Title Insurance policies are real estate owners and mortgage lenders unlike other types of insurance which offer protection against future possible occurrences (i.e., Fire, Flood, Disability, or Death). Title Insurance insures against past occurrences, which could result in a claim at a future date. Title Insurance provides the insured "peace of mind" in knowing that they are receiving good and marketable title to the real estate they are purchasing.

WHAT IS A TITLE SEARCH?

A title search is a thorough review or examination of the public records that pertain to real property ownership, and the rights/limitations in its use. The search period will begin with the current owner(s) and extend back in time for a period of 60 years (commonly referred to as the "chain of title"). During that search period, all documents affecting the subject property are reviewed for accuracy, completeness, and proper execution. Similarly, all owners of record during the search period are indexed to determine their ownership interests, marital status, and legal and mental capacity to enter into a contract to sell/buy real property. All conveyances must have been properly conducted and approved by the appropriate governmental departments, i.e., County Recorders Office, Auditors Office, etc. Once the title search is completed, the results are given to a title examiner (officer) who makes a determination as to the insurability of title.

WHAT KINDS OF PROBLEMS CAN A TITLE SEARCH REVEAL?

A title search can show any number of title defects and liens, as well as other encumbrances and/or restrictions. Among these are unpaid taxes, unsatisfied mortgages, judgments against Buyers/Sellers, and any restrictions or conditions limiting the use of the land.

ARE THERE ANY PROBLEMS THAT A TITLE SEARCH CANNOT REVEAL?

Yes. There are some "Hidden Hazards" that even the most diligent title search may not reveal. For instance, a previous owner could have incorrectly stated his marital status resulting in a possible claim by his legal spouse. Other "Hidden Hazards" include Fraud and Forgery, Defective Deeds, Mental Incompetence, confusion due to similar or identical names, and clerical errors in the County Records. These defects can arise after you've purchased your home and can jeopardize your right to ownership in part or completely.

WHY DOES THE BUYER NEED TITLE INSURANCE?

Without an Owner's Title Insurance Policy, you may not be fully protected against errors in the public records, hidden defects not disclosed by the public records, or mistakes made during the examination of the title of your new property. As a result, you may be held fully accountable for any liens, judgments, or claims brought against your new property. However, your Owner's Title Policy ensures that if such an occasion arises, you will be defended, free of charge, against all covered claims and paid up to the amount of the policy to settle valid claims.

WHO'S PROTECTED BY A TITLE INSURANCE POLICY?

For a one-time premium, an Owner's Policy of Title Insurance is your best protection against countless potential title defects that could deprive you of your ownership rights and the need for you to incur substantial legal expenses if a defect in your title arises. Similarly, a Loan Policy issued to your lender protects its mortgage interest in your property by insuring that its mortgage is a valid and enforceable lien. In the event of a claim, Guardian Title will either correct the covered title problems or will reimburse you and/or your lender for insured losses up to the amount of the policy and will defend against any lawsuit attacking the property as insured.

WHAT IS A HUD SETTLEMENT STATEMENT (HUD-1)?

This is a summary of the financial portion of the real estate transaction. The Title Company or closing agent is required by the Department of Housing and Urban Development to use the HUD-1 on virtually all one to four family residential real estate transactions involving a lender. The HUD will list the purchase price, loan amount, closing costs for both Buyer and Seller, and show all sums being charged and disbursed to the parties involved. It also clearly summarizes the total amount due from the purchaser.

Please feel free to visit smartrate.com, fill-out a FREE No-Obligation Secure Online Loan Application or call me in my Michigan office at 586-323-2920. I am here to help you with all your mortgage needs.

Free Credit Report???

Perhaps you’ve seen the ads on TV. You’re offered a ‘free’ credit report by a company that has ‘free credit report’ in their web address. While this report could be free, you are asked for a credit card and are enrolled in a credit monitoring program that you will be billed for monthly after the first 30 days unless you cancel the membership.

You CAN get free credit reports with no strings attached however, thanks to The Fair and Accurate Credit Transactions Act of 2003. Go to Annualcreditreport.com.Through the site, or by phoning the toll-free 1-877-322-8228, you can get one report each year from each of the three major credit reporting companies -- Experian, TransUnion and Equifax. (The hearing impaired can use the TDD service at 1–877–730–4104).

The law -- along with the free reports -- went into effect early in 2004. Experian, Equifax and Transunion are required by the law to deliver one free report per year to every consumer requesting it. Formerly, the reports cost as much as $9 a peek.

Be sure to use the official site, though, because criminals and unscrupulous companies are preying on the unwary. Fake Web sites and spam have mushroomed, trying to trick the unwary into paying for something they can get for free. To get the report by mail, write to:

Annual Credit Report Request Service,
P.O. Box 105281
Atlanta, GA 30348-5281

Credit reports are used by the credit bureaus to create your credit score, the three-digit number lenders typically use to gauge your creditworthiness. While reports are free, you still need to pay one of the three bureaus to see your current score.These are no-strings reports. Yet, even the credit bureaus, in their advertising, use free credit reports as a way to sell you credit monitoring or a look at your credit score. Those may be valuable services, but don't be misled: You never have to pay a dime or sign up for any service or e-mail list -- as long as you go through annualcreditreport.com.

Feel free to call me in my Michigan office at 586-323-2920. I am here to help you with all your mortgage needs.

Choosing your First Home

If you are ready to move out of your apartment, there is no time better than now. In most parts of the country, this is a BUYER'S MARKET!! Buying your first home is an important step to having the ability to build better finances and to live in a place that is comfortable. If you are considering a new home, there are specific things that you will want to know before jumping in with both feet.

Before you even begin to look at homes, make sure that you conduct your own investigation. This will mean that you should choose a general location that you would like to live, find the going rates, and what you can or can't afford. As for determining what you can afford, a good place to start is with our mortgage calculators. Here you can compute a monthly mortgage payment, get a basic idea of what size loan you can qualify for, and do a 'buying versus renting' comparison. If you know the basics of what is available, what you can afford, and what you might qualify for, it will be easier for you to get exactly what you want.

Make sure that you begin to educate yourself on the home buying and mortgage loan processes. I would recommend our Insider Mortgage Reports like the one entitled Important Terms You Must Know BEFORE Obtaining A Mortgage. If you don't know what something is, look it up right away or ask. You should also consider things such as your credit rating and your pay check. You don't want to get into something that is over your head or start to look for something, only to find out that you won't be able to get the financing. Visit our website to receive my Free Homebuying Guide and other Insider Mortgage Reports like Money & Time Saving Tips For A Successful Move.

From here, it is all a matter of getting involved with the right people. One of the most important decisions that you can make is to find the right real estate agent. A realtor will help find homes in your price range and in the geographic area you're looking to move to. They also assist you with offer negotiations with the seller and their agent. This will make a large difference in the type of deal that you get as well as what type of home and mortgage you end up with. Real estate agents have tools available to help you find something that is in your price range, desired location and with the amenities and "special touches" you're hoping for.

The process of finding a new home can be challenging and fun. Making sure that you open the front door instead of having to crawl through the back can help you to get exactly what you want. By learning the ropes from the very beginning you stand a much better chance of making certain to get what you want.

Please feel free to visit smartrate.com, fill-out a FREE No-Obligation Secure Online Loan Application or call me in my Michigan office at 586-323-2920. I am here to help you with all your mortgage needs.

Save money during the holidays and buy that dream house in the New Year

The holidays can put a dent in your savings especially if you're planning to buy a home. But there are several ways to cut costs so your finances aren't in the red by New Year's Day. Consider the following money saving tips:

• In lieu of buying presents for every family member, suggest a gift exchange and draw names out of a hat.
  
• Agree on a spending limit for gifts for friends and family and stick to it.
  
• Make your holiday meals a potluck and assign each guest an item to bring.
  To prevent the urge to overspend when shopping, use cash and leave your credit cards at home.
  
• Consider buying a joint gift rather than individual gifts for a family such as a zoo membership or movie tickets.
  
• Instead of holiday wrap, buy monochromatic wrap in holiday colors such as green, red, or gold that can be used all year.
  
• For young children, half the fun of holidays is often opening the gifts. Wrap small, inexpensive items separately - coloring books, crayons and picture books or novels, even stocking stuffers work well. Or recycle hand-me-down toys by wrapping them up and putting them under the tree.
  
• Instead of spending a lot of money on gifts from the mall, give homemade treats like fudge, truffles, cookies or jams and jellies.
  
• To cut down on postage and holiday card costs, send mail only to out-of-town friends and family you're not likely to see throughout the year. Or send e-cards, which are usually free.
  
• To keep your electricity bill down, use a timer to turn outdoor lights on and off at designated hours.
  
• If you know you won't be able to pay your credit card off right away, make sure you use a single low-interest card to make purchases - that way you can easily track them.
  
• When traveling during the holidays, try to fly on the day of the actual holiday (Thanksgiving Day, Christmas Day). It's usually cheaper and there are plenty of seats.
  
• Subscribe to receive e-newsletters from your favorite online merchants. They will often e-mail coupons to use for savings on purchases and shipping costs. Or subscribers may receive private sale information.
  
• Sometimes buying an item online is cheaper than going to the store since many sites don't charge sales tax and offer free shipping. Use the savings to have the gift mailed directly to the recipient instead of standing in line at the post office.
  
• Instead of buying an expensive gift, make a donation to a worthy cause in a friend or family member's name.

Visit our website to check out our Mortgage Calculators to help you determine What Size Loan You Can Qualify For. Also, check out our FREE Insider Mortgage Reports like Money & Time Saving Tips For A Successful Move.

Feel free to call me in my Michigan office at 586-323-2920. I am here to help you with all your mortgage needs.