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Archive for the ‘TITLE – LENDERS INS’ Category

Overall, home buyers today tend to be fairly sophisticated and knowledgeable about the real estate market, but there are still a few points of confusion in the process, a new survey by Zillow of 1,000 potential home buyers found.

Here are the five main areas of confusion the survey revealed:

  • Appreciation: About 42% of home buyers believe home values will appreciate by 7% a year. Reality: Historically, home values in a normal market appreciate by 2% to 5% in a year.
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  • Mortgage insurance: 41% of buyers think they will have to purchase private mortgage insurance, regardless of the amount of their downpayment. Reality: Buyers only need to purchase PMI if their downpayment is less than 20% of the home’s purchase price.
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  • Appraisals: 56% of the buyers said the purpose of the appraisal was to determine if a home was in good condition. Reality: That’s the purpose of a home inspection; an appraisal estimates fair market value.
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  • Home owner’s insurance: 37% of home buyers said that buying home owner’s insurance is optional. Reality: Lenders require homebuyers to purchase homeowner’s insurance.
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  • Ownership: 47% of home buyers said a prospective buyer owns a home after the purchase contract is signed. Reality: The purchase and sales agreement is the beginning of the closing phase, but it can be a long process until they finally take ownership.

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NOTE from Vivianne: Clarification, I believe that Zillow was NOT clear in the survey regarding Home Owner’s Insurance.

There are THREE types of insurances involved in the real estate transaction: Property and Casualty Insurance (Hazard Insurance), Home Owner’s TITLE Insurance, and LENDER’s TITLE Insurance. Of these three insurances, Home Owner’s TITLE Insurance is OPTIONAL, not mandatory or required by law; however it is HIGHLY RECOMMENDED in today’s real estate environment of short sales and foreclosures.

If the purchase of the property is financed with lender financing, mortgage loan, the lender requires the borrower to purchase LENDER’s TITLE INSURANCE and the PROPERTY and CASUALTY (HAZARD) INSURANCE.  Therefore, LEGALLY only two of those insurances are required, however HOME OWNER’s TITLE INSURANCE should be purchased to protect the homeowner’s title to the property – especially if the property is conveyed with Special Warranty Deed, as is often the case with foreclosures.

Contact me directly if you have questions regarding Appraisal, Home Owner’s Insurance, Lender’s Insurance, Property Insurance, or Purchasing a Home in Northern Virginia, Fairfax County VA, Loudoun County VA, Prince Williams County VA

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http://zillow.mediaroom.com/index.php?s=159&item=240

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SOURCE: Zillow Inc.

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Purchasing Home Owner’s Title Insurance always was and still is OPTIONAL. There is no law that requires homebuyer to purchase a Title Insurance – although the same homebuyer MUST purchase Lender’s Title Insurance that protects the lender’s investment in the property and is required by all lenders.

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However, in the post 2005 years that brought the flood of short sales and foreclosures, purchasing a Homeowner’s Title Insurance is a wise decision – not purchasing the insurance may prove to be a costly mistake.

Homeowner’s Title Insurance is a one-time payment on the Settlement day.

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Merely purchasing the Title Insurance is NOT sufficient. Homeowners need to store the copy of the Insurance in a very safe place where they can find it easily when the need arises. Unfortunately, the Title Company insuring the title will require the policy number and the date the title was purchased before they will pay for any damages caused by the clouded title.

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Clouds in title can be caused by unrecorded deeds, liens, illegal passing of title, defects in foreclosure proceedings, etc.

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Typically, title companies conduct a 60 year back title search to verify the chain of ownership. However, occasionally errors do happen and can lead to costly problems for homeowners.

Just like the Auto Insurance follows the car and not the person driving the car, the Homeowner’s Title Insurance follows the house, not the person who clouded the title.

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In the current environment of short sales and foreclosures, declining to purchase the Homeowner’s Title Insurance is simply too risky.  If you love your home and want to keep it, protect your investment with home owner’s TITLE Insurance – it is one time payment on the settlement day.  Chances are you will be glad you did.

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