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December 29, 2007

What Is Title Insurance?

Filed under: Mortgage,title insurance — Rob La Eace @ 8:50 am

As a potential buyer in the wild world of condos and housing, there is SO much for you to learn about. I understand it can be quite overwhelming. Loan pre-approvals, choosing a qualified, professional Realtor that you work well with—the list goes on and on. One part of the buying process you will not encounter until your transaction is nearly complete is the purchasing of Title Insurance. “Rob, what is Title Insurance?” you ask. Well, allow me to explain. When you take title of your new property, you will need to purchase a policy to protect your lender’s interest in the title and a separate policy to protect your interest in the title and property. The lender’s policy is based on the amount of the loan and the buyer’s policy is based on the purchase price of the home.” Rob, why do I need Title Insurance?”.

Funny you should ask. There are many, many reasons to have such a policy. I’ll outline a few of the more important ones. In the event that a deed or mortgage in the chain of title was a forgery, a claim could be made that you no longer have a right to the land and property. What if someone could be proven to have been mentally insane or incompetent at the time the deed was transferred? Could a jury of 12 determine that your purchase should not be recognized? Possibly so. What if a deed was made by a person who was not the owner, but had the same name as the owner? How about this one (right out of the movies): An heir to the property, who was presumed dead, appears and claims rights to your home and land. The list could go on and on, but I think you get the idea. I hope this has helped explain some of the need for Title Insurance. It is my sincere hope that you never have to use it. As always, I recommend you seek the advice of an attorney or tax professional with any legal or finance-related questions you may have. “Live Well, Love Much, and Laugh Often”.

Cheers,
Rob La Eace

Leverage This

Filed under: Mortgage,Real Estate — admin @ 8:50 am

Everyone’s heard of leverage, or the use of a mortgage to increase the return on your cash. You make a 20% down payment on a $500,000 condo. Two years go by and the condo increases in value by 10% to $550,000. But the return on your down payment is 50%. Not bad! Of course, as many are finding out there is the other side of leverage. Suppose you put 5% down on a $300,000 condo in Las Vegas in 2005. You planned to rent the unit out for a while, then flip it. Now the condo market is flooded with new units when you sell – if selling is even possible – you might get $270,000. So you’re out your original investment and still owe the bank $15,000 to boot. Ouch, that hurts! Still, as a way to turn a small stake into a lot of money in a rising market (and home prices have historically gone up), it’s hard beat the leverage that real estate offers. Obviously there are many other factors to consider but I’ll save those for another day.


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