How Does Owner’s Title Insurance Protect Me?

Purchasing real estate is one of the biggest investments most Americans make. Not only is your house and property a valuable financial asset, it is also where you raise your family, make lifelong memories, and the place you call home. To help protect your home, you likely carry homeowner’s insurance, possibly have home warranty policies, and take other measures to mitigate factors that may threaten your property. But what would happen should another party claim to have ownership rights to your family’s home? Here is where an owner’s title insurance policy comes into play.

What Is Owner’s Title Insurance?

There are two forms of title insurance: lender’s policies and owner’s policies. Lender’s title insurance protects the mortgage lender’s financial interests should home loan repayment default or become unenforceable. 

Owner’s title insurance is a type of indemnity insurance policy that helps protect a homeowner against financial loss, or the loss of their property, should title defects be discovered at any point after closing. Title defects are problems with the chain of title and represent another party’s ability to have some level of ownership claim to the property. Common title defects include:

  • Liens
  • Judgements
  • Recording errors
  • Fraud and forgery
  • Undisclosed heirs
  • Improperly probated wills

What Are the Benefits of an Owner’s Policy?

The level of coverage provided by owner’s title insurance varies between standard and enhanced policies. In general, an owner’s policy helps remunerate a homeowner for financial loss in the event certain title defects are discovered and said defects allow another party to have a credible ownership stake. These policies may also cover all or a portion of any legal costs should you need to go to court to defend against title defects. 

How Much Does Owner’s Title Insurance Cost?

The cost of an owner’s title insurance policy corresponds with the value of your property. It is calculated as a percentage of the purchase price of the home. Payment is provided as a one-time premium rendered at the time of the real estate sale and is part of the overall closing costs. 

Perhaps one of the greatest benefits of an owner’s title insurance policy is the peace of mind it provides when it comes to protecting your real estate asset. To learn more about title defects or title insurance, please contact the knowledgeable team at Linear Title & Escrow today. 

Facts About Refinance Closings

There are several reasons why people may choose to refinance their home loan. Refinancing at a lower interest rate could lessen a homeowner’s monthly mortgage payments. In some cases, it could enable a homeowner to cash in some of the equity accrued in the property or shorten the length of the mortgage. Still others may decide to refinance their home loan to assume a different type of mortgage to better meets their needs. Read on to learn some of the primary factors surrounding home refinance loans. 

Closing Costs for Refinance Loans

Even when refinancing an existing mortgage, homeowners can expect to pay closing costs at the time of settlement. With refis, however, the closing costs are typically wrapped into the loan. Given this factor, homeowners may not be required to bring payment to the closing table unless they choose to pay closing costs and avoid having this amount factored into their monthly mortgage payments. Visit our previous post to learn more about closing costs for a mortgage refinance.

Closing Timeframe for a Mortgage Refinance

It can be challenging to estimate the time it takes for a mortgage refinance to close, as this will vary according to the lender and will depend on each individual lender’s refinance process. Factors like home appraisals may be necessary, which could impact the time it takes to close.

Closing Disclosure Forms for Refis

A Closing Disclosure (CD) form will be submitted by the mortgage lender to the borrower at least three days prior to closing. This form outlines the financial details surrounding the borrower’s responsibility as it pertains to the closing costs, amount of the loan, loan interest rate, repayment of the mortgage, and other financial specifics. It is important to review this document in its entirety and very carefully, and to reach out to the lender right away with any questions, concerns, or discrepancies.

Refi Closing Day

Whatever the reason for a mortgage refinance might be, it is vital to be fully prepared on closing day. A valid government-issued ID will be required in order to close. Consulting the title agent or attorney conducting the settlement on what to bring and what to expect can help ensure preparedness on closing day.

To learn more about the process for a refinance closing, contact the team at Linear Title & Escrow today.

FAQ: The Closing Process for Homebuyers

Purchasing a home is one of the most exhilarating events in a person’s life. Whether you’re buying your first place, your dream house, or the home where you plan to retire, sitting at the closing table is surely a highlight along the journey called life. If you’re about to close on a new property, you may be wondering what to expect. Read on to explore some of the most commonly asked questions surrounding the closing process when buying a home.

How long does it take to close on a home?

Closings are typically scheduled about 30 to 45 days after contract ratification. This timeframe may vary, however, depending on the type of mortgage product.

What should I bring to my closing?

On the day of closing, you’ll need to bring a government-issued ID (two forms of identification may be required, in some cases) and payment for closing costs (in the form of a certified or cashier’s check).

Who conducts a real estate closing?

Closings are conducted by a title closing agent or a real estate attorney.

How much will I pay in closing costs?

Closing costs are determined by a number of factors. For buyers, closing closes are generally between 2 – 7% of the sale price of the home. 

What is included in closing costs?

Settlement costs for homebuyers vary from case to case, but often include:

   • Mortgage origination fee and loan discount points

   • Mortgage insurance

   • Appraisal fee  

   • Homeowner’s insurance

   • Pre-paid mortgage insurance

   • Property taxes

   • Transfer taxes

   • Title search fee

   • Recording fees

   • Other closing fees

   • Lender’s title insurance (generally required)

• Owner’s title insurance (not required, but highly recommended)

For more on the closing process for homebuyers, please contact Linear Title & Escrow today.

What Is Title Insurance?

Safeguarding your real estate purchase against the possibility of title defects is important whether the home you buy is brand new or several decades old. Title defects discovered after closing could indicate that other parties have some ownership claim on your property, which may lead to legal costs or even result in the loss of your home. Title insurance is a type of policy that helps protect your rights to your property as the owner if title defects are identified any time after closing. Read to learn about the primary types of title insurance and how this indemnity policy might protect your real estate investment  ¾and the place you call home.

Types of Title Insurance

Title insurance is purchased at the time of settlement. There are two main forms of title insurance, and they function independently to protect the interests of the two primary parties in a real estate sale: the lender and the homebuyer (owner).

  • Lender’s insurance:A lender’s title insurance policy protects the mortgage lender against financial loss if the home loan becomes unenforceable or if the homebuyer should default on the mortgage at any point during the repayment period. The majority of mortgage lenders require homebuyers to purchase a lender’s policy at the time of closing. 
  • Owner’s insurance: An owner’s title insurance policy is optional for homebuyers and is highly recommended. This type of policy may be purchased in a standard or an enhanced form, and serves to provide financial reimbursement if another party attempts to stake an ownership claim to your property.

What Can Owner’s Title Insurance Protect Against?

Standard and enhanced title insurance policies vary in terms of the types of title defects against which they offer protection. Title defects discovered after closing can range from the more common, such as recording errors, judgments, and liens, to zoning violations and undiscovered heirs. Title insurance policies can help cover the costs of correcting title errors and legal fees (should you have to defend your ownership rights in a court of law), and remunerate for financial loss in the event you lose the property to another party.

Consulting with an experienced title agent can help you understand the differences between standard and enhanced title insurance policies so that you can choose the option best suited to your needs. For more on the benefits of title insurance, please contact Linear Title & Escrow today.

What Is a Title Search?

An important part of the real estate closing process is ensuring the title on the property can be transferred free and clear and without defects. A title defect is an any issue the interferes with the proper and legal conveyance of ownership rights surrounding a given property from the current owner (or seller) to the homebuyer. Common title defects include liens associated with the property, judgments, unpaid taxes, or other encumbrances. 

Any problems that are identified must typically be resolved before the real estate transaction can be completed. A title search is an investigation into the ownership history of the property and is conducted to discover any problems that may prevent this transfer of ownership rights. In addition, a title search can identify any easements on the property, deed restrictions, and property boundaries. 

Who Conducts a Title Search?

A property title search is conducted by a title (or closing) agent of the title company handling the closing or a real estate attorney. It is generally performed during the closing preparation process, after the real estate contract has been ratified. The fee for a title search is typically paid for by the buyer.

How Is a Title Search Performed?

A title search usually starts with a search of public records. The title examiner conducting the search evaluate the chain of ownership regarding the property. They will also examine all records associated with the property that could affect title, including mortgage history, deeds, land records, marriage and divorce proceedings, bankruptcy documents, and probate records. Tax records will also be searched to ascertain whether there are property taxes that remain unpaid. If any defects are discovered, the appropriate steps will be taken to resolve the issues in an effort to render the title free and clear.

When Is a Title Search Necessary?

Title searches are performed during the closing process for new homes sales and the sale of existing homes. Since refinancing an existing loan requires the establishment of a new loan, a title search is also conducted during these transactions to screen for any title defects that may have been been missed in a previous search or to determine if any new judgments or liens have occurred against the property.

A title search is an integral part of the closing procedure. To learn more about this process, please contact the experienced team at Linear Title & Escrow today.

Title Defects | Unknown Liens

Liens are a common type of title defect that can interfere with the transfer of ownership rights surrounding a real estate property. Essentially, a lien is a security instrument representing a creditor’s (or legal entity’s) interest in a property as collateral for a debt. If the lienee fails to uphold their end of the obligation, the creditor has a legal claim to the property in some capacity. In a number of cases, unresolved liens impede the process of transferring the deed of a property to a new party, creating a title defect or barrier to closing.

Common Types of Liens

Liens may be held by financial institutions and additional creditors, government municipalities, tax authorities, and other parties. Some of the most common types of liens include:

-Mechanic’s liens

-Tax liens

-Judgment liens

-Bank (mortgage) liens

-Child or spousal support liens

-HOA (homeowner association) liens

Will a title search identify unresolved liens?

During the settlement process, a title agent or an attorney will conduct a thorough title search in an effort to identify conditions that may prevent ownership transfer or jeopardize a homeowner’s property rights. Since liens are recorded in public records, a title search should generally uncover any outstanding liens associated with the property. 

How are liens resolved?

Liens may be resolved in a number of ways, which are largely based on the nature of the lien. In many cases, liens must be paid off or satisfied according to the lien holder’s discretion before being released. Sellers may also attempt to negotiate the dollar amount of a lien into the contract price of the property. Liens recorded erroneously may be disputed through legal proceedings. The manner in which liens are resolved may also vary by state or municipality.

Title Defects | What Are Recording Errors?

To kick off our series on title defects, we thought we’d start with recording errors — one of the most common types of title problems that we see. Recording errors are clerical mistakes or omissions on deed-related documents that have been filed in public records. While human error is a part of life, these title concerns can have a significant impact on your ownership rights surrounding your property unless they’re resolved.

What is a deed?

Before elaborating further on recording errors, we should explain what a deed actually is. A deed is an important legal document that spells out who maintains title (ownership) rights regarding the utilization of and access to a real estate parcel. When a property is conveyed from one party to the next, such as during a real estate transaction, the deed serves as legal proof of these ownership rights. 

What types of recording errors might occur?

Errors in public records can be varied and can really impact any aspect of the deed-transfer process. Some of the most common recording mistakes we see include:

-Spelling errors (such as in names or street addresses)

-Incomplete or incorrect legal description of the property

-Missing information (such as a spouse’s name)

-Missing signatures

-Improper filing of the documents

-Incorrect marital status

How are recording errors corrected?

Recording errors are generally detected when a title agent or attorney performs a title search on a property during the real estate settlement process. If this type of title defect is identified, steps may be taken to correct the error, which might include filing a new deed (a warranty deed or quitclaim deed), filing a corrective deed or corrective affidavit, or completing and submitting other legal documents to have the omission or error fixed. The form of documentation required will depend upon the type of error, the state in which the property is located, and other considerations. In certain cases, no action may be required to correct a recording error. A title agent or attorney can help to identify what approach should be taken for recording error resolution.

If you have questions about recording errors or other title defects, please contact the professionals at Linear Title & Escrow in Virginia Beach, VA.

Understanding Title Defects

Over the next few months, we’ll be breaking down some of the most common title defects, providing insight into the types of issues that can arise and how these conditions may be resolved. Before we dive into our upcoming series, let’s take a moment to review the basics of title defects.

What are title defects?

Title defects are irregularities in the ownership history of a piece of real estate that may prevent the free, clear, and proper transfer or sale of a property to another party.

Why should I be concerned with title defects?

Title defects can interfere with your ability to take full and proper ownership of a property. If title defects are discovered after closing (also referred to as settlement), another party may have some ownership stake in your property.

What does “clouds on title” mean?

Clouds on title is another term referencing discrepancies associated with the chain of ownership on a given property.

How are title defects identified?

In most cases, title defects are identified through a title search. There are instances, however, when evidence of a title defect will arise after settlement has occurred.  

What is a title search?

A title search is a thorough investigation of the ownership history of a property. It is accomplished by reviewing legal documents recorded with the clerk of courts in the municipality in which the property is located.

Who conducts a title search?

Title searches are generally performed by a title agent or an attorney.

What happens when a title defect is found?

When a title defect is discovered during a title search, the title agent or attorney will take steps to have it resolved. The method of resolution, however, will vary according to the type of title defect that has been identified. While some title defects, like recording errors, are resolved by submitting corrective documentation, others may involve court proceedings and additional processes.

How can I protect my property against title defects?

Owner’s title insurance is a type of indemnity insurance policy that can help to protect home buyers against financial loss should another party successfully claim an ownership stake in their property. 

 For more on title defects, contact the team at Linear Title & Escrow today!

What Is the Difference Between Title and Escrow?

If you’re going through the steps to buy a home, you’ve likely heard the terms “title” and “escrow” at some point during the process. Title and escrow are two very important components central to most real estate transactions. Whether you’re a first-time homebuyer or have several purchases under your belt, it’s a good idea to know what these terms actually mean. Read on to learn more about title and escrow and how they might apply to the settlement proceedings surrounding the property you intend to purchase. 

What is title?

Title is the legal term describing the past and present ownership of a piece of real estate and the right of said owner to use the land/property. When one party sells a property to another, the title and the deed (or document describing these ownership rights) are passed on to the buyer. Title transfer and deed preparation activities are generally conducted by a title agent or real estate attorney.

Title search: Identifying title defects

In order for title to pass seamlessly and legally from one party to the next, it must be free and clear of title defects, or issues that would prevent this transfer of ownership. Prior to transferring title, the physical act of which takes place at the real estate closing, the title agent will carry out a title search. To perform a title search, the agent will conduct a thorough evaluation of the history of ownership on the property via public records in an effort to identify any issues, or “defects,” that would prevent the proper transfer of property rights. In most cases, any title defects that are detected must be resolved in order to conclude the real estate sale. While there are a wide range of title defects, some of the most common include:

-Mechanic’s liens

-Judgments

-Unpaid taxes 

-Improperly probated wills

-Undisclosed heirs

-Recording errors

-Fraud or forgery

What is escrow?

Escrow describes the holding, management, and disbursement of the legal documents and funds central to a given real estate transaction. The escrow agent functions as a neutral third-party to facilitate the closing process, receiving and disbursing the funds and documents according to the conditions set forth in the real estate contract. Since most real estate purchases involve large sums of money, utilizing an escrow agent can ensure all parties are fairly represented (with respect to the collection and distribution of financial assets) and streamline the closing process.

How can I learn more?

At Linear Title and Escrow in Virginia Beach, VA, our experienced team serves as a trusted source for real estate closings and escrow services throughout the Hampton Roads area. To learn more about title, escrow, title search, or other aspects related to real estate settlements, please contact our office today!

How Are Buyer Closing Costs Calculated?

Buying a home is a big part of the American dream. Whether you’re a first-time home buyer or seasoned pro, sitting at the settlement table on closing day is a thrilling (and often life-changing) experience. If you’re going through the process of buying a home or even refinancing an existing mortgage, you’re likely wondering what your closing costs might be. It’s important to understand how settlement costs are calculated so you can have a solid idea of what to expect when it’s time to close on your home loan.

What Are Closing Costs?

Closing costs are the fees paid by the buyer and seller at the time of the real estate settlement. They’re a part of every formal real estate transaction, regardless of the type of purchase, mortgage product, or property. On average, buyer closing costs can range anywhere between 3 – 6% of the purchase price. However, they do vary according to several factors, including the amount of the loan, the type of loan, mortgage insurance, and taxes, among others.

Buyer Closing Cost: A General Overview

The total amount of closing costs is specific to each situation, buyer, and individual sale. When purchasing a new home or refinancing an existing mortgage, your overall settlement fees may include the following:

-Mortgage origination fee (typically 0.5% of the loan amount)

-Loan discount points (if applicable)

-Mortgage insurance

-Title search and recording fees

-Transfer taxes

-Lender’s title insurance

-Owner’s title insurance 

-Home appraisal fee

-Property taxes

-Homeowner’s insurance

-Boundary survey (if applicable)

-HOA fees (if applicable)

-Other administrative or settlement fees

Reviewing Closing Costs

It’s essential to review your closing costs carefully, whether you’re buying a home or refinancing your mortgage. You should receive a loan estimate from your lender about three days after submitting your mortgage application. This document typically includes all of the estimated expenses associated with closing your loan. A Closing Disclosure (CD) form should be provided to you three days prior to your closing date. The CD outlays your financial responsibilities in detail, from itemized closing expenses to monthly mortgage payment amounts. Any questions, concerns, or revisions to these details must be made before closing day.

Learn more about the closing process from the experts at Linear Title & Escrow!