Blog – Page 394 of 892 – Mike Pfefferman

09

Oct

Mortgage Tips

Understanding Title Insurance and How It Impacts Your Mortgage Loan

Understanding Title Insurance and How It Impacts Your Mortgage Loan When you buy a home, you will be given a title to your new property. A title is a legal document that proves you own the property, and in most cases the title excludes other parties from making an ownership claim.

However, not all titles give you free and clear ownership of the property. Title insurance protects you and your lender from title disputes and other ownership issues that may arise. Here are just a few ways that title insurance can impact your mortgage.

How Title Insurance Protects A Lender

There are certain situations in which someone might put a lien on your property. New owners might see liens if the previous owner failed to pay the mortgage, if a contractor did work without the new owner’s consent or if the previous owner owes unpaid property taxes.

If these liens were not disclosed prior to the sale, a buyer could face a situation where a third party is making a claim to the property. Should the title by voided in court, the insurance policy would repay the lender the outstanding balance on the mortgage. The policy is valid until the mortgage loan is paid off.

When a homeowner refinances, it may be necessary to purchase a new title loan policy, as the new loan will technically pay off the old loan.

How Title Insurance Protects A Buyer

Title loan policies do not just protect the lender. In many cases, the lender will require the buyer’s title insurance to include an owner policy. This policy confirms that the buyer owns the title and that the title is free from defects.

The policy is in effect for as long as the buyer or his or her descendants own the house. Should a homeowner have his or her title challenged, the policy will cover all losses up to the amount of the original purchase price of the home.

How Much Does Title Insurance Cost?

The cost of title insurance can vary between locations. Sometimes, the purchase contract will stipulate that the seller is responsible for buying title insurance.

If this is the case, the buyer may pay nothing. However, it is common to pay on a sliding scale. Title insurance is usually a few hundred dollars for houses selling for under $500,000.

Title insurance is a great way to protect your investment in your home. It insures you against ownership disputes and liens, which means your house is truly yours. For more information about title insurance, contact a qualified mortgage professional in your area.

08

Oct

By First Rate Financial Group

Home Buying Tips

How Much House Is Too Much House: A Mortgage Calculation Guide

How Much House Is Too Much House: When it comes to finding a home, this is an exciting time. Many people love looking at houses; however, the reality is that people also need to think carefully about how much house they can actually afford. Buying a home is a big decision and for many people this is going to be the most expensive purchase they ever make in their lives. Therefore, it is important to take the time to get this decision right. There are plenty of ways for people to calculate how much house they can actually afford. With a budget in mind, this will make the shopping process easier.

The 28 Percent Rule

One of the top ways that people can figure out how much house they can afford is called the 28 percent rule. This is a simple formula that states that the house should only spend 28 percent of their gross income on expenses related to homeownership. This includes:

The mortgage, including the principal and interest
Real estate taxes
Homeowner’s insurance
Private Mortgage Insurance (PMI), if this applies
HOA dues

Keep in mind that this is the gross monthly income, meaning that this is before taxes.

The 36 Percent Rule

Another key rule that people need to keep in mind is called the 36 percent rule. This is a rule that states that that people should not spend any more than 36 percent of their gross monthly income on debts. This might include housing expenses (such as the ones above), loan payments (including car loans and student loans), child support, alimony, and credit card debt. Therefore, those who have more of these expenses are going to have less money to spend on a home.

Find The Right Budget For A Home

This is a short overview of how people can figure out how much house they can afford. Once people know how much they can spend each month on a home, they should be able to calculate backward to figure out how big of a loan they can actually take out. Of course, it is always important to remember that there are trained professionals who can help people figure out exactly how big of a house they can afford.

07

Oct

By First Rate Financial Group

Home Buyer Tips

Closing Costs: Understanding What It Costs to Close on a Home and What You Can Expect to Pay

Closing Costs: Understanding What It Costs to Close on a Home and What You Can Expect to Pay If you’re in the process of buying a new home, you’ve likely heard the term “closing costs” in regards to the many different fees and taxes that you’ll be required to pay during the purchase process.

In this post we’ll look at a number of these closing costs and what you will be expected to pay when you buy that next dream home.

Taking out a Mortgage? There Will Be Fees Attached

If you’re taking out a mortgage to finance the cost of buying your home you’ll end up incurring a variety of fees. Nearly all lenders will charge a mortgage application fee, which covers the cost of processing your application and all of the necessary paperwork.

You’ll likely have to pay for a professional appraisal of the home as well, as the lender will want to ensure that they aren’t lending you more than the house and property are actually worth.

Inspection And Insurance Costs Will Add Up

If you’re buying a pre-owned home you’ll need to pay for a home inspection to gain an understanding of the home’s condition and if you’ll need to make any repairs in the near future. You’ll also need to purchase homeowner’s insurance on the property to protect yourself in the event that something does go wrong with the home.

If you put less than 20 percent down on the cost of the home, your mortgage lender may also require that you purchase private mortgage insurance; this will vary depending on which state or province you are buying in.

Don’t Forget About Escrow Fees and Taxes

As with any major financial transaction you’ll need to satisfy the tax man by paying various taxes on your purchase. These will vary depending on where you are buying your home, but might include sales taxes, property taxes, transfer taxes, recording fees, title transfer fees and more.

If you used a third-party escrow service to manage these fees or to hold your deposit during the closing process you’ll also need to pay escrow fees prior to signing the final paperwork.

If you have other questions about the closing process and fees or costs that you’ll need to pay when you purchase a home, contact your local real estate agent. They’ve assisted many individuals just like you with their home purchase and will be able to provide expert advice.