Author Archives: lineartitleandescrow

On Good Terms: Common Real Estate, Mortgage and Closing Terminology to Know

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How to get the mostWhether you’re on the hunt for a new home, considering a refinancing option or casually browsing the current real estate market, it’s good to have a sound understanding of what certain words or phrases relative to your efforts actually mean. We’ve compiled a list of terms you’ll likely encounter in such situations.

  1. Land Survey: Instrument that describes, maps and documents boundaries and characteristics of a property.
  2. Closing/Settlement: Finalizes the process of transferring ownership of a property from one party to the next.
  3. Closing Costs: Monies paid by buyers and sellers in the final settlement of a real estate transaction.
  4. CD Form (Closing Disclosure Form): Document that presents mortgage particulars, closing costs and detailed financial responsibility of the home buyer.
  5. Title Insurance: Protects the lender’s financial interests (Lender’s Policy) and homeowner’s rights to the property against loss due to title defects.
  6. Title Search: Process of reviewing the title history of a property for defects.
  7. Loan Discount Points: Also known as pre-paid interest. Allows a home buyer to pre-pay interest to lower the interest rate on a home loan. Each point paid equates to 1% of the loan amount.
  8. Mortgage Pre-Approval: Process of becoming approved by a lender to borrow up to a certain loan amount, after submitting financial documents such as bank statements, employment verification and tax returns, among others.
  9. Contingency: Clause included in a real estate contract that enables one or both parties to cancel the transaction based on certain circumstances.
  10. Buyer’s Agent: Real estate agent representing the home buyer(s) and their interests.
  11. Listing Agent: Real estate agent representing the home seller(s) and their interests.
  12. Adjustable-Rate Mortgage (ARM): Mortgage in which the interest rate fluctuates based on market conditions, causing the monthly loan payments to increase or decrease.
  13. Fixed-Rate Mortgage: Mortgage in which the interest rate is fixed over a specified period of time (typically 15 or 30 years).
  14. Loan Origination: Performed by the lender, and encompasses all phases of the loan process, from initial application to release of funds.
  15. Escrow Agent: Third party responsible for holding and maintaining all funds and documents related to a real estate transaction until closing.
  16. Escrow: Type of account established by the lender. Holds a portion of each monthly mortgage payment, the collective funds of which are used to pay property taxes and homeowner’s insurance on an annual basis, or when due.
  17. Home Appraisal: Professional third-party assessment performed to determine the fair market value of a property.
  18. Home Inspection: Professional third-party service designed to determine the current condition of a home. Finding are produced in a document rendered to the lender and home buyer.
  19. Seller Concessions: Certain closing costs paid by the home seller on behalf of the home buyer.
  20. Private Mortgage Insurance (PMI): Type of insurance often required on conventional loans, when the borrowers put less than a 20 percent down payment on a home. Remains in effect until loan-to-value reaches less than 80 percent.
  21. Short Sale: Real estate sale in which the amount received for a home is less than the loan balance. In this case, the lender agrees to accept less than what is owed on the property.
  22. HOA Fees or Assessment: Monthly, yearly or bi-annual fees or one-time payments assessed by a homeowner association, collected for the purpose to maintain, improve, develop or further modify private residential neighborhoods.
  23. Amortization: Describes the payment of a loan over time, through a series of regular monthly mortgage payments.

 

Have questions about other real estate, mortgage or closing terms? Contact our friendly team at Linear Title & Escrow today!

What Are the Most Common Problems Found During Title Search?

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If you’re in the process of purchasing a home, you’ll likely hear the term “title search” at some point during the settlement procedure. A title search is an investigation into the history of a property. It’s conducted by the title agency handling the real estate closing, to reveal any and all concerns, defects or other issues regarding title to the property in question.

Seller's Closing Costs

What Are Title Defects?

Title defects are clouds or problems surrounding ownership of the property. Ownership must be transferred from one party to the next in a proper, thorough and legal fashion. When this fails to occur, problems arise – problems that could be costly unless Owner’s Title Insurance coverage is in place.

The Four Most Common Problems Identified During Title Search

We’ve been running title searches for over 12 years. And while there are a number of title defects that can arise (see “23 Reasons You Need Owner’s Title Insurance” on our Title Insurance page for more), there are a handful that seem to cause issues more so than others.

  1. Judgments against prior owners is one of most common categories of title defects we see. Judgment liens and bankruptcies affiliated with the property and unresolved by previous owners can stall closing procedures until legally released.

 

  1. Unreleased deeds of trust are extremely common title problems. An unreleased deed of trust is one that’s still tied to the property, and not yet recorded by the Land Records Department. Fortunately, it’s relatively easy to resolve this type of defect.

 

  1. Incorrect filing of heirs and/or wills that aren’t probated are other title defects that often arise. These types of clouds take a bit longer to resolve, and may involve time in court.

 

  1. Clerical errors happen (we’re all human). A common example of this type of title defect involves legal description of the property (erroneous or omitted information). Depending on the nature and extent of the error, it can take anywhere from days to months to correct these types of issues.

 

Certain title defects may be common, but having an Owner’s Title Insurance policy is the best possible way to protect your home and financial investment. For more on title defects or title insurance questions, contact us today!

 

 

Q: “Can I Choose My Own Title Insurance Company?”

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This is a question we’re often asked when preparing for a real estate closing. If you’re looking into buying a new home, be aware that title insurance is typically an important factor in the closing process.

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What Is Title Insurance?

Title insurance is a type of insurance policy that covers the mortgage lender’s interests in the transaction (Lender’s Title Insurance) and your financial investment in the property as the future homeowner (Owner’s Title Insurance). However, it’s important to understand that title insurance on your property doesn’t fall under the blanket protection of a single policy: Lender’s and Owner’s Title Insurance policies are indeed separate policies, each of which carry its own premium.

Lender’s Insurance Is Usually Required. Owner’s Insurance Is Highly Recommended.

Let’s start by saying that purchasing a Lender’s Title Insurance Policy is usually non-negotiable. Most mortgage lenders require homebuyers to have this type of policy to cover their interests in the case of title defect or other issue. But an Owner’s Title Insurance Policy, on the other hand, is entirely optional.

We do, however, strongly advise that you purchase an Owner’s policy, to protect against the loss of your home, further financial responsibilities and time in court in the event that clouds or defects on the title to your home surface in the future. See our page on title insurance to learn more on the benefits of having this coverage.

The Option to Choose Depends on Your State

Since purchasing Owner’s Title Insurance is optional, many homebuyers wish to know if they can choose their own title insurance company, or shop around for the best deal. In some states, this may be allowed. However, Virginia maintains strict regulations over the insurance industry, leading most underwriters to remain competitive in their pricing when it comes to premiums.

Whether you choose a standard or enhanced Owner’s Title Insurance plan, the difference in fees from one insurance provider to the next will likely be negligible. It’s also worth noting that purchasing an Owner’s Policy enables a discount on the Lender’s Policy, known as a “simultaneous discount rate.”

 

At Linear Title & Escrow, we put the interests of the homebuyers and sellers we are privileged enough to work with first. Our process of procuring title insurance involves working with only the most reputable insurance companies in the industry. For more information on title insurance policies or premiums, please contact us today.

 

 

 

 

 

 

 

Must Sellers Be Present at Closing?

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It’s widely understood that homebuyers must be present when closing on their real estate purchase, as mortgage notes and other documents must be signed at that time. But are sellers required to attend closings with their buyers? Read on as we discuss the role of the seller in closing on a home.

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Do Buyers and Sellers Meet at the Closing Table?

If you’re a first-time homebuyer or selling the first home you’ve ever owned, you may be wondering whether buyers and sellers come face-to-face at the closing table. However, such a scenario rarely happens. Both the buyer and seller do, in fact, have their own closings. But the process and requirements are a bit different, depending on which side of the transaction you sit.

The Seller’s Closing

From the seller’s vantage point, it’s fair to say that the closing process involves much less paperwork, and even less time compared with that of the buyer. The seller’s closing must take place prior to the buyer’s in order to convey the property in a proper and legal manner.

In some scenarios, sellers are located out-of-state, and are unable to attend the closing in person. Closings in such a case take place virtually, or via mail, with sellers signing necessary documents in the presence of a notary, and said documents being promptly transferred or delivered to the closing agent.

The following is general information regarding the seller’s closing process:

  • Sellers may or may not be required be physically attend the closing.
  • The seller’s closing takes place before that of the buyer’s.
  • Documents to be signed include the Seller’s Closing Disclosure Form/ALTA or HUD, Warranty Deed and Loan Payoff Agreement.
  • Proper identification must be presented at the time of closing.
  • Wiring instructions regarding proceeds of the sale must be clearly specified (if applicable).

Have questions about your role as a seller? Contact Linear Title & Escrow for answers today!

 

A Day in the Life of a Title Agent

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Ever wondered what, exactly, title agents do all day? Are we busy? Are we bored? Do we sit around drinking coffee and checking our Facebook feeds?

No. Nope. Not even close. We take our coffee on the go (because let’s face it – caffeine is one of the four main food groups). We work non-stop, from the second we arrive at the office to the moment we leave for the day. Our days demand the ultimate in multi-tasking, fine attention to detail, and sheer excellence in time management. But what makes up the fabric of our day? What do we really do that keeps us so busy?

An Average Day as a Title Agent (Though No Day Is Ever Really Average)

When it comes to preparing for a closing, a great deal goes on behind the scenes. The daily responsibilities of a title agent range from preparing closing documents to conducting title searches and reviewing Closing Disclosure (CD) forms. We read and respond to hundreds of emails from lenders, agents, attorneys and other parties involved in settlement proceedings, and prioritize our daily agenda to deliver the highest level of efficiency for each of our clients.

Our duties include (but are not limited to):

  • Prepare closing documents
  • Transfer closing documents to CD forms
  • Review CD forms for upcoming closings
  • Enter revisions on CD forms
  • Compile title binders
  • Execute title searches
  • Research and resolve title issues
  • Prepare files for title orders
  • Ensure funding for loans
  • Coordinate CD instructions with lenders
  • …and a whole host of other title and escrow-related duties

How We Stand Out Among the Crowd

No day is the same as the next. At Linear Title & Escrow, our ultimate goal as title agents is to work diligently, competently and thoroughly at ensuring the most efficient closing possible for our clients. We strive to be quick, but highly efficient (which is important for lenders, clients and ultimately home buyers/sellers). We strive to be competitive with returning title requests back to lenders, typically within one week of said request. And most importantly, we maintain integrity, confidentiality, and strict adherence to regulations and the highest level of standards in our industry.

Yes, we are busy – but we love what we do. For more on how Linear Title & Escrow works  to create smooth, seamless closings, contact our team today!

Closing Timetable: Why the Wait?

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Photo by Tristan Colangelo on Unsplash

You’ve put in an offer and it’s been accepted. You’re super excited and ready to move forward with transitioning into your new digs. The only thing standing between you and your dream home is the closing process. If you’re a first-time homebuyer, you may be surprised to learn that it typically takes between 30 and 45 days to close on a home – and sometimes longer, depending on the type of mortgage and circumstances. Why the wait? Why does this process take so long?

The Real Estate Transaction, From Beginning to End

A great deal happens between the time your offer is accepted and you sign on the dotted line. Here’s a general overview of the real estate transaction, from start to finish. (Keep in mind, the processing times for different mortgage products may vary.)

  1. Loan application
  2. Loan approval process
  3. Home inspection
  4. Home repairs (if necessary)
  5. Home appraisal
  6. Review or execution of land survey
  7. Walk-through
  8. Closing

Beware of Potential Closing Delays

A number of factors can delay the closing process:

  • Necessary repairs identified during the home inspection
  • Title defects or other related problems
  • Appraisal comes in under asking price
  • Missing or erroneous information (title and/or mortgage related)
  • Survey discrepancies
  • Buyer’s financing falls through

How Can You Help Ensure the Fastest Route to Closing?

The speed at which your loan is processed may be out of your control, but there are a few things you can do to ensure the straightest path to the closing table.

Be extremely prepared. Have all necessary documents compiled and ready to submit when requested. If you’re the buyer, this includes tax returns (from the past two years), pay stubs and evidence of additional income, bank and asset statements, and other information.

Be responsive. Your lender may request additional information from you throughout the process. To avoid any further delay, it’s best to respond as quickly and thoroughly to any questions, documentation or other requests they may have.

Stay in the loop. Stay in close contact with your agent, reaching out periodically (if need be) to inquire about where things are in the process and how your real estate transaction is progressing.

 

At Linear Title & Escrow, we work hard to ensure each closing is as efficient and streamlined as possible. Contact our team today to learn more!

Title Insurance: Who Needs It, and Why?

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What exactly is Title Insurance? Title insurance Policies protect lenders against financial loss and homeowners from the inability to buy or sell a home. They also protect new homebuyers from losing their home after purchase due to title defects.

Pre-approval

Most mortgage lenders these days require homebuyers to purchase a Lender’s Title Insurance Policy. A Lender’s Policy, issued in the amount of the loan, ensures the financial institution backing the mortgage doesn’t incur loss due to title problems. This type of title insurance offers no protection for the the property owner.

While purchasing an Owner’s Title Insurance Policy is entirely optional, there are many, many prudent reasons for doing so. Title problems can date back years, decades even, only to be discovered in the most recent title search. An Owner’s Title Insurance Policy is well worth the cost, and can save you from suffering monetary loss and heartache during the time you own the property and when you go to sell. Why risk your home and financial investment by not having one?

What Happens When a Title Has Defects?

In short, title defects are problems surrounding property ownership. Defects include issues like recording errors on deeds, unreleased liens, unknown or undisclosed heirs, and other encumbrances preventing a clear (or “marketable”) title. When a title is determined to be unmarketable, the property typically cannot be bought, sold or conveyed. Further, the lender will not approve the home loan until a clear title is presented.

Consider the following scenarios:

Example One

You’ve accepted an offer on your home, and are nearly ready to pass the keys on to the next owner. A title search, however, reveals that the previous owner of the property (from whom you purchased) failed to have an ex-spouse sign off on the sale of the home. This ex-spouse, by all legal standards, can still lay claim to the home you are now trying to sell – the sale of which will not take place until this person has signed and relinquished his/her claim to the property. Having title insurance will save you in this situation, particularly from spending considerable time in court, money in legal fees and delayed closing on the sale of your home.

Example Two

The house you are ready to purchase has changed hands numerous times. The more times a deed changes ownership, the greater the chance of recording errors, omissions and other title defects. You decide to purchase an Owner’s Title Insurance Policy. Shortly after closing, it is brought to your attention that a forgery occurred on a past deed of trust. Since you purchased Owner’s Policy, your costs to remove the defect and establish clear title are covered.

Owner’s Title Insurance Tidbits

  • Each policy incurs a one-time premium, payment for which is rendered at closing.
  • Policies are issued on an individual basis and written for the sale price of the property.
  • Owner’s policies cannot be transferred. A new policy must be purchased when the property sells or conveys to a new owner.
  • An Owner’s Policy covers financial loss along with attorney and other litigation fees for defending title on a property.

At Linear Title & Escrow, we work with some of the top Title Insurance underwriters in the industry. For more on title defects or the importance of having an Owner’s Title Insurance Policy, contact our friendly team today!

 

 

E-Closings: The Future of Real Estate Settlement?

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Cloud-based software systems are designed to make processes, workflow and information retrieval more efficient, streamlined and simply more expeditious. But how has this technology affected the mortgage and title industries? Electronic management of mortgage application/processing and real estate settlement invokes impressions of a totally paperless chain of events. In reality, are e-mortgages and e-closings 100 percent digital? Read on as we explore key points associated with these processes.

E-Mortgages

With e-mortgages, all phases of loan processing occur digitally. Loan documents are drawn up, executed, transferred and maintained electronically. (Though, a “wet” signature is still needed for many mortgage products.) E-mortgages are beneficial in a number of ways. Errors are minimized and shipping costs (for document delivery) are reduced. Companies are able to decrease their carbon footprint, and enable a faster, more efficient transaction overall. Fannie Mae® offers excellent insight and information regarding this topic on their eMortgages page.

 E-Settlement/Closings

The term “e-closing” leads many to assume the property buyer does not need to be present for the closing. And this may be the case, for those utilizing and embracing cloud-based closing software. While “wet” signatures are still required on mortgage documents, some companies are using e-notarization to verify signatures. Notaries bear witness to the signing of documents through Skype or FaceTime, allowing for a completely remote real estate closing.

 The Future of Real Estate Transactions

As with changes to any process in most every industry, complete transformation to a totally digital mortgage and closing process for all transactions is likely far off in the future. Many parties, both mortgage/title professionals and buyers/sellers alike, may continue to prefer doing business face-to-face, or at the very least with a hybrid model that includes partial electronic processing. Others, especially those purchasing homes out-of-state or involved in out-of-area transactions, may find e-mortgages and e-closings more efficient for their needs.

In any case, the industry will likely continue to see a forward push to streamline and expedite real estate sales for a more efficacious process and experience for all.

 

Sources: 

https://www.fanniemae.com/content/fact_sheet/eclosings-emortgages-myths.pdf

http://www.e-closing.com

https://www.housingwire.com/articles/41054-the-game-changer-for-end-to-end-digital-mortgages-eclosings

https://www.housingwire.com/articles/41295-notarize-partners-with-adeptive-software-to-bring-eclosings-to-more-title-agents

 

What Factors Prevent Clear Title?

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magnifying-glass-145942_1280The last thing anyone wants in real estate is to be unable to buy or sell a home because of title problems. Defects, or “clouds,” on title at the very least can stall the real estate transaction, taking anywhere from days to months to resolve. Title companies and their agents work diligently to conduct a title search for each real estate transaction. Unmarketable titles not only prevent proper title transfers – they can be costly to resolve and ultimately result in the inability to sell a property.

Barriers to Settlement: Title Defects

A myriad of factors can prevent clear title and interfere with the closing process. Here are the most common:

  • Unknown or missing heirs
  • False impersonation
  • Liens
  • Prior owner judgments
  • Clerical errors in public records
  • Forgery
  • Fraudulent document execution
  • Inaccurate representation of marital status
  • Improper probation of wills
  • Boundary, survey or easement inaccuracies
  • Unreleased deed of trust

How Are Clouds on Title Resolved?

Resolving defects on title varies, depending on the issue preventing clear title and the circumstances surrounding it. The best way to protect against title problems is to work with a highly experienced title agent, ensure a thorough title search is conducted and purchase Owner’s Title Insurance. In some cases, the courts may need to get involved to “clear” title and render it marketable. In others, liens or judgments must be satisfied, or necessary paperwork completed to remove title defects before closing.

A Word About Title Insurance

Title insurance protects the lender and owner against title defects identified after the transaction closes. Most lender’s require a Lender’s Policy, and buyers are strongly encouraged to purchase an Owner’s policy to insure against significant financial loss. In some cases, the cost of an Owner’s policy may be included in seller concessions. Even if title appears to be “clear,” purchasing title insurance is highly recommended. Visit our title insurance page for additional information.

At Linear Title & Escrow, we are unwavering in our commitment to conduct a thorough title search for each real estate transaction. For help with your title concerns and questions, contact our friendly team today!

First-Time Homebuyer? Here’s What You Need to Know About the Closing Disclosure Form.

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Closing Disclosure FormBuying your first home is likely one of the most exciting and rewarding events you’ll experience in your life. As such, it’s important to be prepared and gain a sound understanding of the real estate transaction process, as this helps make for a more streamlined, smooth closing experience. One of the key components of the settlement process is the Closing Disclosure (CD) Form. Read on for more regarding the importance of this document to closing on your new home.

What’s the Closing Disclosure Form?

The Closing Disclosure Form is a five-page document detailing the final terms of your home loan and closing costs. It contains information similar to that of your Loan Estimate, but also includes details surrounding the escrow portion of your mortgage. The CD Form should be compared with the Loan Estimate you receive from your lender.

What Information Does It Contain?

  • The amount of your loan, interest rate, and projected monthly principle and interest payments.
  • A detailed breakdown of closing costs (those paid by you as the buyer along with the seller’s closing costs).
  • Your financial responsibility (cash needed) for closing on the home and a summary of the transaction.
  • Further details on the terms of your mortgage set forth by your lender, including escrow information surrounding your home loan.
  • Loan calculations (total amount of payments, total amount paid in finance charges, the amount you financed, your annual percentage rate and total interest percentage over the life of the loan). Additional disclosures and important contact information are also found on the final page of your CD form.

When Will You Receive Your CD Form?

Your lender should provide this document to you at least three business days prior to your closing date. During this time, you should carefully review your CD Form, compare it with your Loan Estimate and contact your lender with any questions or concerns. Reviewing this document promptly helps ensure your closing is as efficient as possible, and that you close on time.

Have additional questions about the Closing Disclosure Form, or the closing process in general? We’re happy to help! Contact Linear Title & Escrow today at (757) 340-0340.