Understanding Real Estate Title Insurance Terminology

Like any industry, the title insurance business has a lingo all its own.  The Florida and Cape Coral real estate title insurance agents at Title Junction can walk you through anything you don’t understand and explain any unfamiliar terms to you.  But it always helps to do a little research on your own, which is why we’ve compiled a short list of some of the most commonly used title insurance terms.

Basic Definitions To Know

One thing that is often confused is the difference between a real estate title and a property deed.  Often referred to as “holding title to a property”, a Title provides you with legal use and possession or ownership of the property.  However, it is not a physical piece of ownership evidence; that is the Deed.

Title Insurance, itself, is an indemnity or loss-prevention insurance policy that protects the buyer from legal defects in the title that occurred prior to taking ownership of the property.  In cases where a mortgage is taken out, two title insurance policies will be issued: An Owner’s Policy for the homeowner and a Lender’s Policy, or mortgage insurance, for the mortgage lender.

Understanding Other Terms

You may hear or see the word “ALTA” as you go through the title insurance process.  ALTA stands for American Land Title Association, which is the leading trade association of title insurers. 

Another commonly used term is Escrow.  Escrow has many different meanings, depending on how it is being used.  As it relates to title insurance, it refers to the funds that you provided as earnest money when you made the initial offer on the property.  Those funds have been sitting in a special account set up by your escrow holder, often the title company.  The Closing, which is the final meeting between the buyer, the seller, the lender, title agency, realtors and possibly lawyers where property ownership is transferred.

The Title Report

One of the main duties of a Fort Myers title insurance agency like Title Junction is to conduct a Title Search on the property in question.  A Title Search is an in depth check of public records to make sure the property is legally available for sale and there are no encumbrances or liens against it.  This also shows the ownership history of the property, including mortgages and liens against it.

A Lien is a financial claim to the property.  It may be a mortgage, mechanic or contractor lien or court judgment.  Liens generally must be paid off before a mortgage lender will allow the property sale to take place.  A property may also have an Encumbrance, a legal interest in the land that may affect its value.  Encumbrances could be easement rights, zoning ordinances, claims or liens, unpaid taxes or restrictive covenants.  Encumbrances do not restrict the sale of the property.

The best way to ensure you are comfortable with these terms is to speak with your title agent.  Title agents use these terms all the time and can explain exactly how each is relevant to your personal transaction.  An open relationship with your title agent will ease any pre-closing anxiety you may have.

Tenth Annual Ballpark Festival of Beers in Fort Myers

The Tenth Annual Ballpark Festival of Beers in Fort Myers at Hammond Stadium is this Saturday, January 25, 2014. An opportunity to spend over 3 hours sampling over 85 beers from around the world!

There will be food available and live music to entertain.

Brought to you by Miracle Baseball

When:  January 25, 2014  6:00pm till 9:00pm

Where: Hammond Stadium           
             14100 Six Mile Cypress Rd.
              Fort Myers, FL 33912

Tickets: $25 in advance/$30 at the door

You must be 21 or older to attend. Children, strollers and anyone under the age of 21 will not be allowed into the event.

For more information or tickets visit miraclebaseball.com.

Get out and enjoy the Fort Myers fun…Cheers!

Cape Coral 2014 St. Andrews Festival

So it’s that time of year again, the Cape Coral St. Andrews Festival. I my self make this a tradition every year to go and have some crazy fun with the kids, even now as they grow up. Only now they like to see me get sick in some of the rides!!

Take the family and have some fun in Cape Coral!

2014standrewfestival

January 16th – January 19th. 
St Andrews Catholic School – 2628 Del Prado Blvd South, Cape Coral, FL

* Thursday, January 16th      6:00 to 10:00pm

* Friday, January 17th          6:00 to 11:00pm

* Saturday, January 18th      Noon to 11:00pm

* Sunday, January 19th        Noon to 10:00pm

Ticket prices vary for food and rides and ride bracelets (ride all the rides free with bracelet purchase) are available for $55.00 per bracelet and are available until 5:00pm on the opening day of the festival.  After the festival starts the bracelets will be available but the price increases to $75.00 per bracelet.

For more information visit www.saintandrewsfestival.com or call 239-772-3922

What Is An Escrow Account? Do I Need One?

 

As we show you in this video, an escrow account is an account, established by your lender, to set aside a portion of your monthly mortgage payment to cover annual charges for homeowner’s insurance mortgage insurance (if applicable), and property taxes.

Escrow accounts are a good idea because they assure money will always be available for these payments.

If you use an escrow account to pay property tax or homeowner’s insurance make sure you are not penalized for late payments since it is the lender’s responsibility to make those payments.

What Are Discount Points?

 

Discount points allow you to lower your interest rate. While this video simplifies things to help you remember, “points” are essentially prepaid interest with each point equaling 1% of the total loan amount.

Generally, for each point paid on a 30-year mortgage the interest rate is reduced by 1/8 (or.125) of a percentage point.

When shopping for loans, ask lenders for an interest rate with 0 points and then see how much the rate decreases with each point paid.

Discount points are smart if you plan to stay in a home for some time since they can lower the monthly loan payment.

Points are tax deductible when you purchase a home and you may be able to negotiate for the seller to pay for some of them.

Can I Pay Off My Loan Ahead Of Schedule?

 

Usually, Yes. Like the guy in the video says, by sending in extra money each month or making an extra payment at the end of the year you can accelerate the process of paying off the loan.

When you send extra money, be sure to indicate that the excess payment is to be applied to the principal and keep records.

Remember that payment applied to loan principal is not tax-deductible. Most lenders allow loan prepayment, but some loans may have prepayment penalties.

Ask your lender for details.

What Is Included In A Monthly Mortgage Payment?

 

The monthly mortgage payment mainly pays off principal and interest. But most lenders also include local real estate taxes homeowner’s insurance, and mortgage insurance, if applicable.
If you are refinancing compare what is and isn’t included in your financing options. Watch this video and it’ll make sense.

What Are The Advantages Of 15- And 30-Year Fixed-Rate Mortgages?

 

For both, as we show you in this video, compared with other options,  with fixed rates, housing costs won’t be affected by interest rate changes and inflation.

With A 30-Year Term: In the first 23 years of the loan more interest is paid off than principal meaning larger tax deductions. As inflation and costs of living increase mortgage payments become a smaller part of overall expenses.

With A 15-year Term: Loan is usually made at a lower interest rate. Equity is built faster because early payments pay more principal. And the loan is paid off earlier.

Compare payments, principal and interest totals to make a decision.

What Types Of Mortgage Loans Are Available?

 

This video tells you about the most common types: Fixed Rate, ARM, Balloon and 2-Step.

First, Fixed Rate Mortgages: Payments remain the same for the life of the loan generally 15 years or 30 years. Interest rates remain the same, so payments are predictable.

A second common type is an Adjustable Rate Mortgage, or ARM. ARM Payments increase or decrease on a regular schedule with changes in interest rates increases are typically subject to limits.

Third, Balloon Mortgage: These offers very low rates for an Initial period of time usually 5, 7, or 10 years when time has elapsed, the balance is due or refinanced though not automatically.

Finally, a Two-Step Mortgage- Interest rates adjusts only once and remains the same for the life of the loan.

Many other types are available, including government-insured mortgages and VA loans for veterans. Talk to lenders and real estate professionals to assess your situation.

What Is A Mortgage?

 

The original phrase “mort gage” translates as “death pledge”! But as this video explains, a mortgage is a loan obtained to purchase real estate.
The “mortgage” itself is a lien – a legal claim on the home or property that secures the promise to pay the debt.

All mortgages have two features in common: principal and interest.

The principal is the amount you are borrowing which is “secured” by the lender’s claim on the property.

The interest, usually stated as the percentage rate is the additional amount paid for borrowing. Mortgage interest is ‘compounded’ – interest on interest, over time.