What is title insurance?
Title Insurance usually consists of the Owner’s Title Policy (to protect the purchaser) and the Lender’s Title Policy (to protect the lender). Post-closing title disputes can arise from many types of liens and other title defects, and could potentially jeopardize your ownership in your real estate and the financial investment you have made in obtaining it. Title Insurance protects you from potentially losing your real estate (and down payment) if a pre-existing claim or lien against the land or a prior owner is discovered after you have closed. A title search should reveal all such matters, and when they are properly dealt with prior to your closing, your title insurance policy protects you from anything affecting the property that the title insurance underwriter or agent failed to discover or which was known (or should have been known) by your seller, but was not disclosed and was not made a matter of public record.
Why do the purchaser’s need title insurance?
a) Title Insurance will provide the purchaser of a new home or other real estate peace of mind that in knowing that should any unforeseen claim arise, that the insured would have protection from the total loss of their home and/or total financial ruin.
b) Cost of the owner’s title insurance policy is an inexpensive way to protect your home or other real estate interest since your lender usually requires a lender’s policy as a condition to loan you the money to purchase your property and the title search has already been completed on your property.
What is the title company responsible for?
The title company is responsible for reviewing all the documents related to ownership of the property and verifying that everything is in order before real estate transactions move forward to closing. They review and examine the title search, obtain any documents necessary in order to issue the title insurance policies, facilitate and conduct the closing, record the deed and any other recordable documents, and issue the title policies.
How will the purchaser know what my closing costs are when a lender is involved?
a) Loan Estimates: this is a form designed to provide disclosures to help borrowers understand the key features, costs, and risks of the mortgage loan for which they are applying. Initial disclosures are to be given to the borrower by their lender no less than three business days after application.
b) Closing Disclosure (CD): this is a form designed to provide disclosures to help borrowers understand all costs to be paid to close the transaction, which is also to be given to the consumer no less than three business days before closing.
What other closing costs and fees will I have to pay?
As dictated and required by your specific lender, typical costs and fees the borrower is responsible for paying (some of which may be partially or fully paid for the seller, depending on your contract) include:
• Home Inspections (pest, water test, well and septic)
• Appraisal Fee
• Credit Report Fee
• Survey and Flood Certification
• Title Search and Title Insurance Policies.
• Closing and/or Settlement Fee
• Recording Fees
• Transfer Taxes (Doc stamps on Deed and Doc and Intangible Tax on Mortgage)
What are lenders charges and fees?
a) Origination Fees are assessed by your lender and with the actual processing of your mortgage. This Fee usually includes service fees, application fees and administrative fees that will not be shown as separate line items. If your loan is presented as a no fee loan, then there shouldn’t be an origination fee.
b) Points or Discount Fees is the amount that you are paying to lower your interest rate, or sometimes the Points are a credit that you might take for a higher interest rate (this Point Credit is usually given when the lender is charging a higher interest rate).
c) Escrow and Prepaids are expenses that are paid up front such as your Homeowners Insurance which will cover the lender for the first year of the mortgage, Taxes and Insurance Escrow will also be collected based on one-twelfth of the estimated future payments due for the homeowner’s insurance and taxes.
d) Daily Interest Charges is the interest due to the lender from the closing date until your first payment to the lender.