January 28, 2016 In Title Insurance
Title insurance is confusing for anyone who’s a first-time home buyer. What type of title insurance policy is required to own a home and who is responsible for paying the closing costs and title insurance? It’s important to understand the intricacies that go into the home buying process. First, you need to understand what closing is and what title insurance is. Closing is the point during the sale of a home when the title is transferred to the home buyer from the seller. Closing costs are the fees associated with the purchase of the home and are paid at closing. Title insurance is a wise investment as it protects home buyers and mortgage lenders against defects or problems with a title when there is a transfer of property ownership. Before closing a home, there are some things you should know about title insurance.
Is title insurance required?Title insurance is not required to own a home. However, without it, you lack protection from claims against your ownership of the home and risk losing your investment in the process. There are extreme cases where a title insurance policy saves you from nightmare scenarios, such as hidden taxes, encumbrances, restrictions, and anything that devalues the home or is inaccurately recorded in the deed. Title insurance can protect you against unforeseen or unknown issues that pop up when you buy a property. Some scenarios that may arise include:
When a lien is placed on your home, it can prevent you from refinancing or selling your home unless you pay the outstanding amount. Rightful owners with legitimate claims can result in you losing your home altogether. Even if you believe you can trust the seller, the home itself could come with unknown problems that cause issues later down the road. It’s a good idea to be safe and invest in a title insurance policy. Keep in mind, title insurance only covers issues that date from before you took ownership of the home. If the government decides it wants to tear down your house and build a highway, or you don’t pay your property taxes, you’re out of luck. Title insurance won’t cover you. >>>> Visual Guide to Closing Costs… Get the PDF.Who pays for owner’s title insurance or closing costs?In the case of the home buyer’s title insurance policy, it’s customary for the seller to pay the costs of the policy issued to the new homeowner. Mortgage lenders also require a title insurance policy. It’s customary for the lender’s policy to be paid by the home buyer. The home buyer’s escrow funds end up paying for both the home owner’s and lender’s policies. Upon closing, the cost of the home owner’s title insurance policy is added to the seller’s settlement statement, and the lender’s title insurance policy is covered by the buyer before closing. Fees can be negotiable, and it’s important to keep in mind that you can shop lenders until you find one that offers you a loan with lower fees. Closing costs may vary depending on where you live, the type of property you buy, as well as the type of loan you choose. Before you start the home buying process, ask your lender if they’ll require you to have cash reserves. Today, many lenders ask that borrowers have extra money in the bank – not just what’s required for the down payment and closing costs, known as cash reserves. These reserves aren’t technically part of closing costs because you’re not actually paying the money, but it’s required you have it in the bank as it proves you can make your first few mortgage payments. Other items you’ll want to check off your list before closing day arrives include: Make sure all contingencies are taken care of. Most purchase agreements have contingencies set in place that home buyers must do before the sale is official. These include a home appraisal ensuring the value of the home is accurate, home inspection showing the home doesn’t have any issues, and the ability to back out of the sale if your mortgage falls through. Obtain final mortgage approval. Prior to closing, your home loan must go through an underwriting process. Underwriters are like real estate detectives – their purpose is to make sure you have represented yourself and your finances honestly, and that you haven’t made any false or inaccurate information on your loan application. Examine your closing disclosure. If you’re securing a loan, one of the best ways to prepare is to thoroughly review your closing disclosure, also known as a HUD-1 settlement statement. This official document outlines the exact amount of your mortgage payments, the loan’s terms, and closing costs. You’ll want to compare your closing disclosure to the loan estimate your lender initially gave you. If you see any differences, ask your lender to explain them. Perform a final walk-through. Most sales contracts allow home buyers to do a walk-through of the home within 24 hours prior to closing. During this time, you’ll want to make sure the prior homeowner has vacated, unless other arrangements have been made. This is the time to ensure the condition of the home reflects what was agreed upon in the contract. If the home inspection revealed problems the sellers agreed to take care of, confirm all the repairs have been made. Bring all required documentation to closing. To avoid any delays in closing, bring the following items when you head to the closing:
How much should you pay in closing costs?For most home buyers, closing costs are a percentage of the total cost to buy a home. Most of the closing costs are the responsibility of the home buyer, which typically average about two to five percent of the sale price. For a home that’s $250,000, closing costs can be anywhere between $5,000 and $12,500. Among the expenses are things like: Some costs are optional, may be transferred to the seller, and vary in price from state to state. It all depends on how you choose to do business. Some states with high real estate costs may experience higher fees for things like escrow deposits. Oftentimes, the buyer’s closing costs can be worked into the initial price of the home or original contract with the seller. For instance, the home buyer may request to bid on a home by asking the seller to pay for three percent of the closing costs or even a set dollar amount. Something else to think about is that government agencies may pay the closing costs of first-time home buyers. Eligibility will depend on where you live, and it may make sense to check into county or state down payment assistance programs in your area. Many times, these programs will provide the down payment to buy a home, and they’ll either give you or lend you the closing costs. Are you planning to close on a home soon?Closing day is an exciting time – you’re almost to the finish line and in your new home. But it’s good to be prepared and know what to expect. Besides all the documents that need to be signed, here are some other things to expect on closing day:
If you’re planning on closing on your new home soon, it’s a good idea to work with a knowledgeable team of title experts. Bay National Title Company offers reliable real estate owned and title services for home buyer and lenders.
SOURCES: Who pays for title insurance? Who pays closing costs when you buy a home? Who pays the closing costs? |
Who pays for title insurance in Utah?
zusammenhängende Posts
Urheberrechte © © 2024 frojeostern Inc.
