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Why you should be discussing title insurance

by Joe Klarman

Why you should be discussing title insurance

When buying a home, you come across a lot of terminology and you may not know what all of it means for you as a homeowner. Title insurance can be one of those terms that you may not be familiar with, but it is in your best interest to know why having a title insurance policy can save you from potential legal actions and financial loss.

Made to protect lenders and owners of real estate against damage or any property loss they may encounter from liens, defects in the title, or impediments, title insurance policies are subject to various terms and conditions from state to state.

While the insurance policy you carry on your car or even your health is there to protect you in case of any future problems, title insurance is much different. Title insurance is in place to safeguard against any actions that transpired previously, with the real estate itself or the prior owners. You will pay a one-time premium at the close of escrow and the policy will cover you as well as your heirs, as long as you have interest in the property.

What else do I need to know about title insurance?

There are two types of title insurance policies, one for lenders, and one for the buyer of the property. While all mortgage providers require a lender policy, it does not cover the owner of the property. You must purchase your owner's policy independently.

After your contract for purchase is accepted, the specialist handling the titling of your home will do a search of public records to try to locate any problems with the home's title. It is common since almost one-third of title searches produce some kind of defect in the title but the title company will do its best to handle any issues that may arise before you go to closing.

Title issues can come up, even with the most thorough searches of the property. A title insurance policy will protect you against unforeseen events that may take place after you have taken ownership of the home. Having an owner's policy is highly recommended to keep your biggest investment safe.

Types of title defects

  1. Fraud and forgery can cause trouble for anyone purchasing a home. The perpetrators involved in real estate scams are cunning and tenacious, and they can cause difficulties that can remain concealed until long after closing, no matter how precautious the title company is.
  2. A missing heir can cause issues long after you have acquired the property if they are related to the deceased homeowner. Your rights to the home could be compromised, but an owner's policy ensures that you will have representation if litigation were to ensue.
  3. An illegal deed may affect the ability to enforce prior deeds and ownership, as well as present-day possession. Your policy may help if deception has been found in the handling of the title.

The only way that you can ensure being fully protected as a homeowner is to have an owner's policy that covers any problems with the title that were not found during the initial records search. You will have peace of mind that your title company will stand behind you, if you have to deal with any unanticipated problems. You will need to check with your owner's policy issuer to see what types of hidden title issues are covered.

Home Search Checklist

by Joe Klarman

It goes without saying that a home is the biggest investment that you will ever make. It will, therefore, be well worth your time to consider what you want in a home and develop a system to evaluate the properties you visit. A home buyers' check list is a good way to stream line your evaluation process. As you visit a property you can go over your check list and score each of the features that are most important to you. Later on, after visiting several properties, you can look over your home buyers' check lists to see which homes scored the highest. The home buyers' checklist can be a great way to organize your notes during the home searching process.

You should start out by considering what features are most important to you. For example, if you have children or are planning to have children, then number of bedrooms, neighborhood, and schools may all be important to you in your home search. If you are single, then you may be more interested in local atmosphere, restaurants and entertainment venues and proximity to your job. Because a house is such a big investment, it's a good idea to think big picture and long term.

There are also features that, in the excitement of finding a home that suits you, may be overlooked. This includes things like the age and condition of the roof and the furnace. Is the basement damp? How sound do the electrical outlets appear? What about the plumbing? Emotions can run high when considering what your life will look like in a particular home or how you might change layout or décor. Having a check list will help to remind you to look at the practical items that can be as important as your wish list when searching for a new home.

Where does one find a home buyer's checklist? You can easily create your own check list using spread sheet software. It is a good idea however to create your list several days or even a couple of weeks in advance so that you can adjust your check list as ideas come to you.

If you would rather have a ready-made check list, a quick web search can help. HUD has a thorough checklist. Other websites such as Angieslist.com can offer lots of great advice about what to look for and what to avoid when choosing a home.

Your home will be the base from which you operate, a place of solace and comfort where you can get away from the world and the place you invite friends. It is also a large investment that you are not likely to make every year or two. Take the time now to organize yourself so that you can make as thoughtful and informed a decision as possible. You will be glad you did.

First Time Home Buyers

by Joe Klarman

Buying a home can be so nerve-wracking that a first timer might be tempted to give up and go back to renting. The learning curve is indeed very steep, but you can resolve most of the issues before they occur with a little preparation. Here are some tips to make your life easier as you go through the process of buying your first home:

  • Pay down Your Debt

    Get your old debt paid down before applying for a mortgage. This means any credit card or student loan debt. If you neglect this, you may not get your loan or you may get less than optimal terms. In many cases, the bulk of a first time homebuyer's debt is in the form of student loans. Be careful about making your payments on time or you may find yourself with a poor credit score and be unable to qualify for a home loan.

  • Build up Your Savings

    Do what you have to in order to save money. Consider steps such as moving back in with your parents or not taking vacations. As a first time homebuyer, you will need to embrace frugality in order to own a home.

  • Establish a Budget and Stick to It

    The first step is to determine the kind of home that you can really afford. The general rule is to opt for a home that costs about two and a half times your annual wages. Next, you will want to factor in all of your expenses. Keep your monthly bills in mind. For example, you will want to know how much you will be spending on utilities in your new home. Note that there will be maintenance expenses as it is only a matter of time before you will need to cover a costly repair or replacement. Once you think you have a budget, use it to practice. Before you get your mortgage, deposit payments into a savings account and leave the money there. This will give you an idea of whether you can really afford your mortgage or not.

  • Consider the Length of Your Home Loan

    Why is the length of your mortgage term important? Consider the fact that a 15-year mortgage will take half the time to pay off when compared to a 30-year mortgage loan. Also, remember that the monthly payments will be significantly more. They will not be double the amount of the 30-year ones since you will be paying less interest over a shorter period, but they will still be a lot higher.

  • Gather your Paperwork

    Lenders will likely want your wage and tax statements (your W2s) for the last two years. They will want yours and those of your spouse as well. Also, they will want to see federal tax returns for the last two years as well as two or three months worth of bank statements. If you own stocks, bonds or mutual funds, they will want to see asset statements. You will  need to provide a copy of your current driver's license along with everything else. Note that some lenders will request a credit report fee.

  • Think About Where You Want to Live

    Avoid casting too wide a net when considering places to live. Having too many options may make the decision difficult. Focus on a specific area. You should drive through your prospective neighborhood to get a feel for it before deciding on a property.

Final Walk Through Tips

by Joe Klarman

One of the most important steps in the home buying process is the final walkthrough. Many homebuyers don't pay enough attention to the final walkthrough because they are too excited about finally closing on a house especially if it's taken a while to find the right house for them. However, this is your chance to make sure that everything about the house is as it's supposed to be as it was agreed upon with the seller. You don't want to sign your name on the dotted line only to find that there are serious issues that have developed since the home inspection was done that are going to cost you an arm and a leg to fix. The following are some tips to help you do your final walkthrough:

When to Schedule the Final Walkthrough

Typically, you'll want to schedule your final walkthrough a day before the closing. This way, you reduce the odds of anything happening to the property between when the walkthrough occurs and when the closing occurs. However, it's often suggested that you do two walkthroughs. One should be done a week prior to the closing. This gives you time to find any problems and speak to the seller about them. The seller will then have some time to fix the problems, thereby not delaying the scheduled closing date. You'll then do the final walkthrough the day before the closing to see if those issues were fixed.

The Agreement

First of all, you should look for everything that you and the seller spoke about and agreed upon. You'll need to bring your contract, home inspection report and the disclosure form of the seller's property condition in order to make sure everything checks out as it is officially written. You'll also want to keep any verbal agreements in mind when doing the walkthrough. For example, if the seller told you that they would leave certain window treatments or light fixtures, such as a chandelier, then you'll want to make sure these items are present. Also be sure to note items that you don't want. Some sellers will leave things they don't want and hope that you'll just deal with them, or they'll simply forge them, whether it's a bookcase or cans of paint. It's the seller's responsibility to remove these things, so take note of them.

What to Look For

The following are some of the things that you should look for when going through the house and around the property:

 

  • Turn on all the lights in every room to make sure they work.
  • Check all of the appliances to ensure that they are functioning properly.
  • Turn on the heat and air conditioning to make sure they work.
  • Inspect the doors and windows to ensure they operate properly and aren't damaged.
  • Turn on all the faucets and make sure that there are no water leaks.
  • Flush all the toilets to ensure they operate properly.
  • Visually inspect the walls, floors and ceilings for potential damage or issues.
  • Turn on all the exhaust fans to make sure they are in working condition.
  • Check to see if the agreed upon repairs have been made.
  • Test the garage doors.
  • Do a visual inspection of the home's exterior. Make sure the siding is in good condition and that the roof isn't missing shingles especially if it's stormed recently.

If you do find any problems in the house, whether they are repairs that haven't been made or new issues that have popped up, have your agent speak with the seller's agent about a solution before the scheduled closing date.

 

Affordable Condos

by

http://www.seattlepi.com/realestate/article/Seattle-real-estate-profile-Feb-10-2015-6073520.php

Things Not to do When Buying a House

by Joe Klarman

Deciding to buy a house is a huge decision to make. Homeownership comes with a lot of responsibilities that you have to make sure that you are prepared for. The process of becoming a homeowner can be a long and sometimes difficult one as well, which means you’ll want to prepare yourself mentally for that possibility. There are a lot of steps to take when you first decide to buy a home. However, there are also a lot of mistakes that you can make during this period as well. The following are a few things that you should avoid doing when buying a house:

  • Over using your credit – Your credit score is very important in obtaining a mortgage with good terms. Bad credit can lead to lenders hiking up the interest rate or disqualifying you altogether – so stop using those credit cards and begin paying down your debt! Don’t even put small items on your credit cards if it’s possible not to as this can affect your debt-to-income ratio. If anything, you should begin paying down your credit card debt in order to help improve your score.
     
  • Pay your bills late – Late payments can really hurt your credit score. Paying one bill 30 or more days late can hurt your score by as much as 110 points! This may not be too big of a deal if you still have a score hovering around 800 – but if the late payment was on rent or a mortgage, the lender is going to think twice about qualifying you. If you can’t pay your rent on time, how do they know you’ll pay your new mortgage on time? And if you were late on a previous mortgage – well, that’s a huge red flag.
     
  • Moving money around – In addition to looking at your credit, lenders will also take a look at your bank statements. They want to make sure that you’ll be able to pay for a deposit. Some people will borrow money from family for the deposit and put it in their bank account. While this is perfectly fine, you should do this months in advance. Lenders will frown upon any major deposits or withdrawals – especially if you don’t have a paper trail to account for them.
     
  • Co-signing on a loan – Financial experts never recommend co-signing on a loan, no matter what the situation is. If you co-sign on a loan for a friend or family member, it could end up straining your relationship with them if things don’t work out. If the person you are co-signing for stops making payments on the loan, then you are responsible for that debt. Not only can that leave you in a poor financial situation, it could destroy your credit. Lenders will also consider that as another monthly obligation – even if the person you co-signed for is incredibly responsible and pays all of his or her payments on time. It’s going to hurt your debt-to-income ratio and assets no matter what.
     
  • Employment changes – When lenders look at your background, they want to see financial stability. If you’ve just lost your job or even if you are just starting your own business, they are more likely to disqualify you. In fact, if you get a promotion but a portion of your income gets shifted to a commission basis, it could hurt you!

These are a few things that you should avoid doing before buying a house. Be sure to obtain a credit report so that you know what your credit score and history are as well.

 

Displaying blog entries 1-6 of 6

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Russell Jones Real Estate
536 Broadway East
Seattle WA 98102
Office: (206)323-0800
Direct: (206)683-5639
Fax: (206)323-9275