Category: Resources


5 Reasons Why Every Homebuyer Needs Owner’s Title Insurance

Protect Your Home

Buying a home is an exciting 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.    Covers Your Heirs*

As long as you or your heirs* own your home, owner’s title insurance protects your property rights. It’s really simple, as you can see by clicking this visual explanation of owner’s title insurance.

4.    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. The value from this one-time fee is unbeatable; And, usually the cost for owner’s title insurance is 0.5% of the home’s purchase price.

5.    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.

 

Want more information?

Hillsborough Title  helps homebuyers like you understand the importance of title insurance, so you can protect your property rights. Feel free to reach out to our team by clicking HERE.  We’d love to help protect your dream home!

 

 

*For exact terms, conditions, exclusions, and limitations, please contact a Hillsborough Title location near you.


Why a Permit Search is so Important

By Aaron M. Davis, President of Hillsborough Title

night-office-shirt-mail

It’s June of 2013, and I get the call. It’s that number you haven’t seen call your cellphone in a while, and something in your gut says, “This isn’t going to be good.” An agent who does business with us, let’s call her “Sally” for our purpose here, was handling the seller side of a transaction in which the buyer selected title. The buyer was an institutional investor who had a relationship with a national title provider. In June of 2013, it was NOT the norm for the title agency to order any type of municipal lien search or permit search. At this time, it was not required as part of the FAR/BAR contract. In fact, the contract only contained the Miami-Dade provision as to municipal lien searches at that time. However, since the buyer was an institutional investor, they were well aware of the risk that resided in Florida pertaining to permits.

Sally begins the conversation something like this, “Hi Aaron, I have a seller of a property who is ready to sue me, my broker, the previous seller, and the law firm who handled the transaction.”

I respond, “Well, good morning to you Sally!”

Sally went on, filling me in on the details.

The current Title Company performed a Municipal Lien Search with Permit Search as part of the buyer’s requirements and due diligence. The permit search pulled up an open permit on the pool. The house was built in 1998 and Buyer 1 bought direct from the builder/developer. The pool was added to the property in 1999 by buyer 1, and in 2004, Buyer 1 sold to Buyer 2, then Buyer 2 selling to the current buyer, Buyer 3 in 2007.

However, nowhere along the chain of the transaction was any permit search performed. The contracts didn’t call for it, and the title provider never searched, as it wasn’t customary or required. Back then, the title commitments and policies contained an EXCEPTION for what is now called the Section 159 Statute, which is related to items of “unrecorded nature” (i.e. unrecorded code enforcement, utility bills and permits).

So in 2013, the first permit search was completed only to find the open permit on the pool. It was a cash offer and the seller was free and clear; no liens, judgments, and the seller already vacated the property and was leaving the state. I make some calls, get it resolved and close the deal! Easy peasy, lemon squeezy.

WRONG!

So here it begins: The buyer won’t buy the home until the permit is closed. So, my first call to action- call the pool contractor – from 20 years ago – who is no longer in business. Second call, let’s contact another pool contractor to see if they can inspect and sign off on another contractor’s work. WRONG, no can do. Their liability insurance won’t allow that.

Next, let’s call an engineer! An engineer went to school for this sort of thing, and he can sign off! So we have the owner call the engineer to see how he can assist. The engineer says, “Sure, no problem, let me call the county to see the issue with the permit.” As it turns out, it was the final PLUMBING inspection for the pool. Engineer laughs and says, “Well, it’s 20 years old and it’s not leaking, I’ll sign off on it.” (Crowd erupts with applause. Problem solved, right?)

As my friend Lee Corso says, “NOT SO FAST MY FRIEND!!!”

Per the county, in order to close a permit of this nature, the pool has to be brought into current compliance with Child and Elderly Safety. So, guess what the pool that was built in 1999 DIDN’T have? You guessed it, child safety gates!

Let’s do the math:

  • $250.00 to the County to reopen the permit
  • $400.00 to the engineer
  • $2000.00 for the child safety gate
  • $50.00 County re-inspection fee

Now, let’s add up the losses:

  • $1,000.00 is expenses to the seller for added utility, storage, expenses
  • Future referrals to the agent from a seller who thinks perhaps it’s the agent’s fault
  • Future referrals to the prior title company, who did the closing in 2007, that the agent now may think is THEIR fault

The losses can go on and on.

 

In September of 2013, the FAR/BAR contract was then amended to include the requirements for permit searches. After the fact, we now see the slew of issues that are caught due of performing the search. (Roofs are a very common issue.)

Now here is the scary part – even though it’s is a part of the FAR/BAR contract, there are still title agencies and law firms that STILL DO NOT PERFORM THE REQUIRED SEARCH!

With that being said, agents, I highly suggest that you ask for THREE things from your title provider when closing:

  1. Get a copy of the preliminary settlement statement (to have your client’s fees)
  2. Ask for a copy of the title commitment (to see if there are any items outside of the norm, odd exceptions, etc)
  3. A copy of the results from the lien search, showing there are no outstanding issues that will turn up in the standard title search

6 Selling Mistakes

If you’re selling, don’t do these things – take some notes from the video!
1. Don’t Sell Before The House Is Ready.

If it doesn’t present well, it won’t sell well.

2. Don’t Over-Improve

People buy houses in neighborhoods.

If yours is so “improved” that it sticks out you’re hurting your chances at selling.

3. Hire Wrong

Make your agent choice for business reasons.

Personal relationships matter, but experience and expertise will determine financial success in your sale.

4. Don’t Hide Anything

Covering up or ‘failing to mention’ real problems doesn’t work.

State disclosure laws are strict and you can be sued after the sale for anything that should have been made clear.

5. Don’t Rush

You should know about your mortgage, including pre-payment penalties your market conditions and trends and your options for your next home before jumping on the market.

6. Don’t Get Too Emotional

Your attachment to your house and your own financial needs

don’t really matter in the transaction.

If you can’t set them aside the sale won’t go as you’d like it to.

Remember – it was your home but to the buyer it’s as a house.

 

How Do I Make A Home Ready To Sell?

As we show you in this video, start several months before the property is made available. Look through the eyes of a buyer

  • What needs to be cleaned?
  • Repainted?
  • Repaired?
  • Or tossed?

Ask yourself – or a friend, If you were buying this house what would you want to see?

The goal is to show a home that looks good makes the most of its assets like space and location and attracts as many buyers and as much demand as possible.

Allow yourself enough lead time – not just a day or two – to make the most of the sale. And get help from a real estate agent – early.

What Steps Need To Be Taken To Secure A Loan?

You’ll see some pictures in this video to help you remember later, but the first step in securing a loan is to complete a loan application.

To do so, you’ll need the following information.

  • Pay stubs for the past 2-3 months.
  • W-2 forms for the past 2 years.
  • Information on long-term debts.
  • Recent bank statements tax returns for the past 2 years.
  • Proof of any other income.
  • Address and description of the property you wish to buy.
  • A sales contract on the home you want to buy.

During the application process, the lender will order a report on your credit history and a professional appraisal of the property you want to purchase. The application process typically takes between 1-6 weeks.

What Is Equity?

Equity is the value YOU own in property such as a house. It’s the difference between what’s OWED and what the property is WORTH in the current market.

The example this video shows – you have a house worth $300,000 today and you owe the bank $200,000.  Your equity would be $100,000.

If the house is valued at $500,000 in five years, and you still owe $150,000 your equity will be $350,000.

Equity grows if the property value goes up or if the amount owed goes down.  The key thing to remember, simple as it sounds, is that you “own” increases in value. The bank’s loan doesn’t go up if the home’s value goes up.

Equity in a home can be used as collateral for loans but a house is not a piggy bank. Home equity can become a key financial asset over time; treat it wisely.

What Is “Prime”?

The Prime Lending Rate – sometimes just called “Prime”  – is the interest rate that banks charge each other for overnight loans. Some consumer rates – like ARMs – are set in relation to Prime.

In the US, Prime is affected by the Federal Reserve lending rate to banks; historically, Prime is about 3 percent above the Fed rate.

The video shows  an example.

  • The Federal Reserve loans to Bank A at 1%
  • Bank A loans to Bank B at 4%
  • Both banks – A & B – will recalculate variable-rate loans like ARMs on that 4% Prime figure.

ARM rates are frequently defined as “% above Prime” – that gap is usually called the “margin” or “spread.” Just remember those 3 layers in Prime: Federal Reserve Bank A Bank B And finally, YOUR rate.

What Is PMI?

This video tells you about it all. PMI stands for Private Mortgage Insurance or Insurer. These are privately-owned companies that provide mortgage insurance. They offer both standard and special affordable programs for borrowers.

These companies provide guidelines to lenders that detail the types of loans they will insure. Lenders use these guidelines to determine borrower eligibility.

PMI’s usually have stricter qualifying ratios and larger down payment requirements than the FHA but their premiums are often lower and they insure loans that exceed the FHA limit.

What Is Mortgage Insurance?

Like the video shows, mortgage insurance is a policy that protects lenders against some or most of the losses that result from defaults on home mortgages. Like home or auto insurance, mortgage insurance requires payment of a premium, is for protection against loss, and is used in the event of an emergency.

If a borrower can’t repay an insured mortgage loan as agreed, the lender may foreclose on the property and file a claim with the mortgage insurer for some or most of the total losses.

You generally need mortgage insurance only if you plan to make a down payment of less than 20% of the purchase price of the home. The FHA offers several loan programs that may meet your needs.


Can the TRID 3-day rule possibly delay your closing?

One of the regulations associated with the new TRID forms is a 3-day rule. The 3-Day rule mandates borrowers MUST receive the Closing Disclosure 3-days before the closing date. This new rule gives consumers the opportunity to review the closing disclosure and ensure all information is correct and correlates with the Loan Estimate.

However, what happens if any changes need to be made?

The infograph below explains three situations that would require a new closing disclosure and thus, delay your closing.

3 Day Rules