Tag: mortgageinsurance

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Mortgage News Matters

What Does a Title Company Do?

A Title Company is responsible for verifying that the title to a property is legitimate and that the seller has the rights to sell said property to a buyer. They do this by making sure that there are no barriers to purchase like liens, prior mortgages, fraudulent transfers, unknown heirs, and more.

Once verified, the Title Company will provide title insurance, that protects the lender if title issues surface, and potentially the buyer – depending on which policy they choose.

In order to issue Title Insurance, a Title Company must…

  1. Perform a Title Search.

    Typically, the first thing a title company will do, a title search checks to see if there are other people who have ownership or rights to the property. It can also reveal outstanding mortgages, any other existing liens, unpaid Homeowners Association dues, judgments or unpaid tax liens, restrictions, easements, and leases.

    In any of these instances, these fees – or restrictions – must be paid off or dealt with before both the seller and buyer can move forward.

  2. Conduct a Property Survey.

    Sometimes, a property survey, or drawing of the property, is required. This will reveal any potential infringements on the property or the land the property occupies, such as a neighbor’s addition having been built in your property. A property survey will verify that the home is set within its boundaries.

    A property infringement could become an issue if there is physical damage caused as a result. If this is the case, the title company will have to take this into consideration when choosing an insurance policy.

  3. Prepare Abstract of Title & Title Opinion.

    An Abstract of Title is a document that shows the history of ownership of a property. This includes when the property was previously sold, and any history of inheritance, court litigation, and tax sales.

    Once the Title Company has the prepared Abstract of Title, they write an official Title Opinion. This document states the seller is the valid owner of the property and they are willing to insure the title for purchase or refinance.

What is Title Insurance?

This is a type of insurance that protects lenders and homeowners from any financial loss, in the case that another party makes a claim to the property title. There are two types of title insurance policies that homeowners can get. These are 1) Lender’s Title Insurance and 2) Owner’s Title Policy.

Types of Title Insurance

  1. Lender’s Title Insurance. Lender’s Title Insurance is required for anyone who is getting a mortgage license. This type of insurance protects the mortgage lender if there is an issue with the property’s title. It is typically paid for by the buyer, and in some cases, the seller will pay. The most important thing to understand about Lender’s Title Insurance, is that it does not protect any existing equity on the home, and for that, the buyer will need to consider a Owner’s Title Policy.

  2. Owner’s Title Policy. An Owner’s Title Policy is an optional insurance policy for buyers who are looking to protect the equity in their home. With this type of insurance, a buyer is protected in the case that another party shows proof of ownership to the title, and whoever transferred the property wasn’t authorized to do so. In this case, the buyer will still have to vacate the home, but they would be given money to buy a new property of equal or lesser value. Without this type of insurance, the buyer would have to leave the home and would not be compensated for any equity built into the home.

When should you consider getting Owner’s Title Insurance?

All homebuyers who purchase a home through a mortgage lender will be required to purchase a Lender’s Title Policy. However, it is their choice whether they want to obtain an Owner’s Title Policy. To help decide if an Owner’s Title Policy is right for you, ask yourself the following questions:

  1. Has the home had multiple owners? If the property has a history of many owners, there is more chance that a separate party could come forward with a claim on the title. Owner’s Title Insurance would protect the buyer for such claims.


  2. Would you be able to afford the legal fees to dispute any potential claims? Even if it is not legitimate, the buyer will still be responsible for the legal fees to dispute the claim to the title. With an Owner’s Title Insurance Policy, the title company is responsible for providing the defense for the buyer.


  3. How much is your peace of mind worth? By obtaining insurance, a buyer has a certain level of protection in the case that someone makes a claim on the title. It protects their investment on the home and pays for any legal fees that may be necessary.
Categories
Mortgage News Matters

What Does a Lender Look for When Approving My Loan?

When beginning the pre-approval process, most lenders are looking for a few major things: Credit History, Capital, Employment, and Collateral.

  1. Credit & Credit History. Lenders will use your current credit and past credit history as an indicator of your ability to repay your debt. They will look at how much you currently owe, how often you borrow, how often you pay your bills – and if you often pay them on time, as well as how well you live within your means. To check your credit score, visit annualcreditreport.com.


  2. Capital. Capital tells the lender how much money you have, to put towards your down payment, as well as funds that will remain in your accounts after closing to be used for reserves. This includes such things as moving expenses, money required to turn on utilities, emergency repairs, or cost of ongoing maintenance. This is crucial information as you begin your home buying journey and apply for a loan.


  3. Employment. Employment tells the lender approximately how long it will take you to pay back your debt. They will check things like your previous employment history, as well as your current employment situation. Lenders are looking for stability in your income earnings trend to help determine its likelihood of continuance.


  4. Collateral. Collateral protects the lenders in the case that borrowers are unable to repay their loan. This is equally important to lenders as credit, income, and employment, as it acts as a safety net in the unfortunate circumstance that the loan is unable to be paid.

For more information on the Loan Application and Loan Process, contact your local VanDyk Loan Originator today!

Categories
Mortgage News Matters

What is the Difference Between Pre-Qualification and Pre-Approval?

Many home buyers know that pre-qualification and pre-approval are necessary steps in the home buying process, but not many understand how they differ, or when each action is required.

To help, we’ve broken down the process of each, and what – you as a home buyer – will need to provide.


What is pre-qualification?

Pre-qualification is an essential first step in the homebuying process. It tells you how much money you can borrow, based on your current finances and credit score, and gives you insight into your mortgage options, allowing your lender to better identify your unique needs and goals.

What do you need to provide for pre-qualification?

  • Income information
  • Credit check
  • Information about bank accounts
  • Down payment amount and desired mortgage amount

What is pre-approval?

Pre-approval is a much more in-depth process that requires more information and likewise carries more weight. This process requires you to complete a mortgage application and requires your lender to perform a credit check. Keep in mind that this process requires a detailed examination of your finances, so be prepared to answer unexpected questions.

The benefit of getting pre-approved is that it shows your seriousness as a homebuyer and your ability to secure a mortgage. Once you receive your pre-approval letter, it is valid for 90 days.

What do you need to provide for pre-approval?

  • Copy of pay stubs showing your income for the previous 30 days
  • Credit check
  • Bank account information or two of your most recent bank statements
  • Down payment amount and desired mortgage amount
  • W-2 statements
  • Personal and business tax returns from the past 2 years



Are you looking to get pre-qualified or pre-approved for a mortgage loan? Contact a VanDyk Loan Originator by calling 888-482-6395 today!

Categories
Mortgage News Matters

Sit Down with Steve Richman

We sat down with VanDyk’s new National Director of Strategic Growth and Branding, Steve Richman to talk about his new role and his plans on growing the team with a thoughtful approach while building brand awareness and bringing an exceptional client experience to every interaction.

Q: Why do you want to work with VanDyk?

Q: What sets VanDyk apart?

Q: Can you talk a little about your title and responsibilities?

Q: What can we expect to see happen in the industry in the next couple of months?

What is your perspective on customer service?