Blog

Here's some general information on Title and Escrow for your information:

The Functions of an Escrow
Buying or selling a home (or other piece of real property) usually involves the
transfer of large sums of money. It is imperative that the transfer of these funds and
related documents from one party to another be handled in a neutral, secure and
knowledgeable manner. For the protection of buyer, seller and lender, the escrow
process was developed.

As a buyer or seller, you want to be certain all conditions of sale have been met
before property and money change hands. The technical definition of an escrow is
a transaction where one party engaged in the sale, transfer or lease of real or
personal property with another person delivers a written instrument, money or other
items of value to a neutral third person, called an escrow agent or escrow holder.
This third person holds the money or items for disbursement upon the happening of
a specified event or the performance of a specified condition.

Simply stated, the escrow holder impartially carries out the written instructions
given by the principals. This includes receiving funds and documents necessary to
comply with those instructions, completing or obtaining required forms and
handling final delivery of all items to the proper parties upon the successful
completion of the escrow.

The escrow must be provided with the necessary information to close the
transaction. This may include loan documents, tax statements, fire and other
insurance policies, title insurance policies, terms of sale and any seller-assisted
financing, and requests for payment for various services to be paid out of escrow
funds.

If the transaction is dependent on arranging new financing, it is the buyer's or the
buyer's agent's responsibility to make the necessary arrangements. Documentation
of the new loan agreement must be in the hands of the escrow holder before the
transfer of property can take place. A real estate agent can help identify appropriate lending institutions.

When all the instructions in the escrow have been carried out, the closing can take
place. At this time, all outstanding funds are collected and fees--such as title
insurance premiums, real estate commissions, termite inspection charges--are
paid. Title to the property is then transferred under the terms of the escrow
instructions and appropriate title insurance is issued.

Payment of funds at the close of escrow should be in the form acceptable to the
escrow, since out-of-town and personal checks can cause days of delay in
processing the transaction.

Closing and Title Costs
It's the big day.
The day you go to the title or escrow company, sign your name on the dotted line,
hand over a check and prepare to take ownership of your new home.

It's also the day that you and the seller will pay "closing" or settlement costs, an
accumulation of separate charges paid to different entities for the professional
services associated with the buying and selling of real property.

It's too often a day filled with uncertainty and stress.

To help you better understand this confusing subject, the Land Title Association
has answered some of the questions most commonly asked about title, closing and
closing costs.

What services will I be paying for when I pay closing costs?
You will usually be paying for such things as real estate commissions, appraisal
fees, loan fees, escrow charges, advance payments such as property taxes and
homeowner's insurance, title insurance premiums, pest inspections and the like.

How much should I expect to pay in closing costs?
The amount you pay for closing costs will vary; however, when buying your home
and obtaining a new loan, an estimate of your closing costs will be provided to you
pursuant to the Real Estate Settlement Procedures Act after you submit your loan
application. This disclosure provides you with a good faith estimate of what your
closing costs will be in the real estate process. An itemized list of charges will be
prepared when you close your transaction and take title to your new property.

How do I go about clearing unwanted liens and encumbrances?
You will wish to carefully review the preliminary report. Should the title to the
property be clouded, you and your agents will work with the seller and the
seller's agents to clear the unwanted liens and encumbrances prior to taking
title.

Who can I turn to for further information regarding Preliminary Reports?
Your real estate agent and your attorney, should you choose to use one, will
help explain the preliminary report to you. Your escrow and title company can
also be helpful sources.

CONCLUSION: In a business which is directed at risk elimination, the efforts
leading to the production of the preliminary report, which is designed to
facilitate the issuance of a policy of title insurance, is perhaps the most
important function undertaken.

What is a Statement of Information?
A Statement of Information is a form routinely requested from the buyer,
seller and borrower in a transaction where title insurance is sought. The
completed form provides the title company with information needed to
adequately examine documents so as to disregard matters which do not
affect the property to be insured, matters which actually apply to some other
person.

What does a Statement of Information do?
Every day documents affecting real property--liens, court decrees,
bankruptcies--are recorded.

Whenever a title company uncovers a recorded document in which the name
is the same or similar to that of the buyer, seller or borrower in a title
transaction, the title company must ask, "Does this document affect the
parties we are insuring?" Because, if it does, it affects title to the property
and would, therefore, be listed as an exception from coverage under the title
policy.

Can the trustee give someone a power-of-attorney?
Only if the trust specifically provides for the appointment of an attorney-in-
fact.

What will the title company require if all the trustees have died or are unwilling
to act?
If the trustor is not able to do so, or the trust provisions prohibit the trustor
from appointing a new trustee, the court may do so.

How does a notary acknowledge the signature of the trustee?
Title is vested in the trustee. Hence, if the trustee is an individual or a
corporation, then the new general form of acknowledgment will be prepared to
reflect the intrinsic nature of the trustee.

How would the deed to the trustee ordinarily be worded to transfer title to the
trustee?
"John Doe and Mary Doe, as trustees of the Doe family trust, under
declaration of trust dated January 1,1992."

What about my original title insurance policy?
When you bought your home, you purchased a Homeowners title policy. The
Homeowners’ policy stays in force as long as you or your heirs own the
home. When you refinance, your lender will often require that you purchase a
new lender's policy to protect their new security interest in the property. Thus,
you are buying a policy to protect your lender, not a new Homeowner's policy.

What could possibly have happened since I purchased my home which
warrants a new lender's policy?
Since the time that the original loan was made, you may have taken out a
second trust deed on the house or had mechanic's liens, child support liens
or legal judgments recorded against you - events that could result in serious
financial losses to an unprotected lender. Regardless if it has been only 6
months or less since you purchased or refinanced your home, a myriad of
title defects could have occurred. While you may not have any title defects,
many Homeowners do. The only way for a lender to adequately protect itself
is to get a new lender's policy each time you purchase or refinance your
home.

Are there any discounts available for title insurance on a refinance
transaction?
Yes. Title companies offer a refinance transaction discount or a short-term
rate. Discounts may also be available if you use the same lender for your
refinance loan and your original loan. Be sure to ask your title company how
they can save you money.

Creative financing
Creative financing: You've heard of it, and, as a seller, the idea sounds pretty
attractive. But, do you know everything you need to know about carrying
back a second; essentially, about becoming a lender? You better know the
same things that financial institutions know - you better know about lender's title insurance.

It's time to sell your $150,000 home, a home that you have owned for fifteen
years, a home in which you have substantial equity. The loan terms call for a
$20,000 down payment from your buyer, a new $100,000 loan from a local
savings and loan, and for you, the seller, to carry back a note for the
remaining $30,000.

Will you, the seller, need title insurance?
Yes, you will. Everyone who retains an interest in the property needs title
insurance. When you took on the role of lender, you retained a record title
interest which you will want to protect for the term of the loan.

But, why would you need lender's title insurance when the repayment of your
loan is assured by a lien in the form of a recorded deed of trust against the
property? What could possibly go wrong?

You must insure yourself for the same reason that financial institutions obtain
title insurance - for the protection of your investment. You must be assured
that your lien on the property cannot be defeated by a prior lien or other
interest in the property, which, if exercised, would wipe out your security.
Anything that involves the new buyer's ownership rights to the property is of
direct interest to you because you are holding the second mortgage. If such
ownership rights are in question or defective, you may have trouble collecting
your monthly mortgage payments. But, you say, there is nothing in your
property's history that could cause problems: no problems with easements,
no problems with boundaries, no problems with rights-of-way.

Contrary to what may be popular belief, these matters are not the only source of title problems; a large proportion of title problems arise out of man's
interaction with man. The fact of a marriage, a divorce, a death, a forgery, a
judgment for money damages, a failure to pay state or federal taxes - these
occurrences can and usually will affect your rights as a mortgage lender.

As an example of what can befall the lender, did you know that a federal tax
lien recorded against your "buyer" before the loan transaction is concluded
may result in the loss of security in "your" home? Sophisticated mortgage
lenders are aware of this possibility as well as many others which could
jeopardize their loan security and seek the protection afforded by a lender's
title insurance policy.

If you are considering carrying back a second, be sure to get all the facts
regarding the benefits of lender's title insurance. Your local title insurance
company should be happy to provide the information you need.

Here's some general homeowner info for your information...

Environmental Issues
When purchasing a piece of property, it is important to be aware of any
environmental liabilities associated with it. For example, you should find out if there
are any registered underground tanks within several miles of the property, any
known contaminated properties in the neighborhood, or any property owners who
have been fined by the government for failing to meet environmental safety
standards.

Before, it took a costly site investigation for the information, but now there are
online environmental databases available at a fraction of the cost. Anyone can
access reports on otherwise hard to detect environmental issues. With these
databases, it is possible to obtain a listing of hazards near a property, or spills and
violations attributed to businesses nearby.

Some reputable databases include VISTA Information Systems, located in San
Diego, California, which allows you to register and search the data bank for free,
and E Data Resources, which is located in Southport, Connecticut. These services
are all relatively inexpensive, but can provide you with priceless information that is
useful before you make a purchase.

Lead Poisoning
Lead poisoning is a serious problem which can lead to adverse health problems. In
children, high levels of lead can cause damage to the brain and nervous system,
behavioral and learning problems, slow growth, and hearing problems. In adults,
lead poisoning can cause reproductive problems, high blood pressure, digestive
problems, nerve disorder, memory and concentration problems, and muscle and
joint pain.

Lead poisoning is especially a problem in cities with older buildings. Typically, lead
is present in the paint from older buildings, in the water supply, and in the
environment from cars and buses. Preventing lead poisoning in large cities, where
there is so much possibility for exposure is both difficult and expensive. Federal
programs have attempted to address this problem.

For buyers and sellers, lead poisoning is also an issue. Houses that were built
before 1978 probably have paint that contains lead. Federal law requires that
sellers disclose known information on lead-base paint hazards before selling a
house. Sales contracts must include a federal form about lead-based paint in the
building. Buyers will have up to 10 days to check for lead hazards and are likely to
stipulate corrections.

Radon
Radon is a colorless and odorless radioactive gas that has been estimated to
cause 5,000 to 20,000 lung cancer deaths yearly. It is second only to smoking as a
cause of lung cancer. It has been estimated that nearly 1 out of every 15 homes in
the US has elevated radon levels.

Understanding Foreclosures
It is an unfortunate commentary, but when economic activity declines and housing
activity decreases more real property enter the foreclosure process. High interest rates and creative financing arrangements also are contributing factors.
When prices are rapidly accelerating during a real estate "bonanza", many people
go to any lengths available to get into the market through investments in vacation
homes, rental housing and "trading up" to more expensive properties. In some
cases, this results in the taking on of high interest rate payments and second, third
and even fourth deeds of trust. Many buyers anticipate that interest rates will drop
and home prices will continue to escalate. Neither may occur, and borrowers may
be faced with large "balloon" payments becoming due. When payments cannot be
met, the foreclosure process looms on the horizon.

In the foreclosure process, one thing should be kept in mind: as a general rule, a
lender would rather receive payments than receive a home due to a foreclosure.
Lenders are not in the business of selling real estate and will often try to
accommodate property owners who are having payment problems. The best plan
is to contact the lender before payment problems arise. If monthly payments are too hefty, it may be that a lender will be able to make some alternative payment arrangements until the owner's financial situation improves.

Let's say, however, that a property owner has missed payments and has not made
any alternate arrangements with the lender. In this case, the lender may decide to
begin the foreclosure process. Under such circumstances, the lender, whether a
bank, savings and loan or private party, will request that the trustee, often a title
company, file a notice of default with the county recorder's office. A copy of the
notice is mailed to the property owner.

If the default is due to a balloon payment not being made when due, the lender can
require full payment on the entire outstanding loan as the only way to cure the
default. If the default is not cured, the lender may direct the trustee to sell the
property at a public sale.

In cases of a public sale, a notice of sale must be published in a local newspaper
and posted in a public place, usually the courthouse, for three consecutive weeks.
Once the notice of sale has been recorded, the property owner has until 5 days
prior to the published sale date to bring the loan current. If the owner cures the
default by making up the payments, the deed of trust will be reinstated and regular
monthly payments will continue as before.

After this time, it may still be possible for the property owner to work out a
postponement on the sale with the lender. However, if no postponement is reached, the property goes "on the block". At the sale, buyers must pay the amount
of their bid in cash, cashier's check or other instrument acceptable to the trustee. A
lender may "credit bid" up to the amount of the obligation being foreclosed upon.
With the recent attention given to foreclosure, there also has been corresponding interest in buying foreclosed properties. However, caveat emptor: buyer beware.
Foreclosed properties are very likely to be burdened with overdue taxes, liens and
clouded titles. A buyer should do his homework and ask a local title company for
information concerning these outstanding liens and encumbrances. Title insurance
may or may not be available following a foreclosure sale and various exceptions may be included in any title insurance policy issued to a buyer of a foreclosed property.

Your local title company will be happy to provide additional information.

Here's some information on mortgages. Enjoy!

Your Savings and Down Payment
Your First Step Toward Buying a Home
When preparing to buy a home, the first thing many Homebuyers do is look at
"homes for sale" ads in newspapers, magazines and listings on the internet. Some
potential buyers read "how-to" articles like this one. The next thing you should do -
before you call on an ad, before you talk to a Realtor, before you shop for interest
rates - is look at your savings.

Why?
Because determining how much money you have available for down payment and
closing costs affects almost every aspect of buying a home - including how you
write your purchase offer, the loan programs you qualify for, and shopping for
interest rates.

Mortgage Programs
If you only have enough available for a minimum down payment, your choices of
loan program will be limited to only a few types of mortgages. If someone is giving
you a gift for all or part of the down payment, your options are also limited. If you
have enough for the down payment, but need the lender or seller to cover all or
part of your closing costs, this further limits your options. If you borrow all or a
portion of the down payment from your 401K or retirement plan, different loan
programs have different rules on how you qualify.

Of course, if you have enough for a large down payment, then you have lots of
choices.

Your loan choices include such varied programs as conventional fixed rate loans,
adjustable rate mortgages, buydowns, VA, FHA, graduated payment mortgages
and all the varieties of each.

Shopping Rates
A very important reason you need to have at least some idea of your down
payment is for shopping interest rates. Some loan programs charge a slightly
higher interest rate for minimal down payments. Plus, the interest rates for different
loan programs are not the same. For example, conventional, VA, and FHA all offer
fixed rate loans. However, the rates vary from one program to another.
 
If you shop lenders by phone, the loan officer will be able to tell which programs fit
and quote you rates accordingly. However, if you are shopping on the internet, you
have to have some idea of your loan program on your own.

See how it works?
In addition to the cost noted on the rate sheet above, lenders have certain other
fees they like to collect, too. These can include document fees, processing fees,
underwriting fees, warehouse fees, flood certification fees, wire transfer fees, tax
service fees, and so on. Usually, you will not be charged all of these fees, it is just
that different lenders call them different things. Some of them are legitimate costs to the lender and some of them are simply fees designed to generate additional
income to the mortgage company. They are customary in today's mortgage market
and can vary from around $600 to $1300. In addition, there will usually be an
appraisal fee and a credit report fee. Appraisals and credit reports are usually
contracted out to independent companies even though these are considered to be
lender fees.

Note that it is common for companies who charge higher fees to have a slightly
lower interest rate and companies that charge lower fees will usually have a
slightly higher interest rate. So if you shop entirely based on fees, you may actually
spend more money in the long run because your interest rate may be higher.
The point is that if you want a "no points - no lender fees" loan, then on our rate
sheet above, you may get an interest rate of 7.125%. That is because the loan
officer has to bump the interest rate even further than on a "no points" loan in order
to cover his own company's fees.

If you want a "no cost" loan, then the loan officer has to bump your interest rate
even further. That is because all of the costs on your purchase or refinance do not
come from the lender. The escrow or settlement company involved in your
transaction will charge a fee which must be paid. The lender will require title
insurance and the title insurance company charges a fee for providing this
insurance. If your new lender requires information from your homeowner's
association (if you have one) then the homeowner's association will most likely
charge a fee for providing those documents. If you are refinancing, your current
lender will usually charge at least two fees: a "demand" fee, and a "reconveyance"
fee. The demand fee is charged simply for providing payoff information. The
reconveyance fee is charged because your current lender prepares a document
which releases your property as collateral for their outstanding loan. This document
is called a reconveyance.

Here's a few tips for those wishing to buy real estate. Enjoy!

Use a Buyer's Agent
It's important that you choose an experienced agent who is there for you. Your
agent should be actively finding you potential homes, keeping you informed of the
entire process, negotiating furiously on your behalf, and answering all of your
questions with competence and speed.

First, find an agent who represents you and not the seller. This is beneficial during
the negotiation process. If you are working with a buyer's agent, he or she is
required not to tell the seller of your top choice. In addition, he or she is also
focused on getting you the lowest asking price.

Also, when you use a buyer's agent, you will see more properties. Not only are they plugged into their Multiple Listing Service, but also they are actively finding homes that are listed as FSBO, or homes that sellers are thinking about listing.

Why You Should Not Make Any Major Credit Purchases
Don't go on a spending spree using credit if you are thinking about buying a home,
or in the process of buying a new home. Your mortgage pre-approval is subject to a
final evaluation of your financial situation.

Every $100 you pay per month on a credit payment could cost you about $10,000
in home eligibility. For example, a car payment of $300/month could mean that you
qualify for $30,000 less in a mortgage.

Even if you have accumulated enough savings, you should consider not making
any large purchases until after closing. The last thing you want is to know that you
could have purchased a new home had you curbed the urge to spend.

Getting a Legitimate Lender and Getting Pre-Approved
It used to be that buyers could go house shopping and when they have found their
dream home, then they go to get pre-approved. However, in today's market, that
has proven to be one of the least effective methods in landing the dream home.

Most lenders can pre-qualify you for a mortgage over the phone. Based on general
questions about your income, debt, assets, and credit history, lenders can estimate
how much mortgage you qualify for. However, being pre-qualified and pre-
approved are different things. Pre-approval means that you have applied for a
mortgage; you have filled out the mortgage application, received your credit report,
and verified your employment, assets, etc. When you are pre-approved, you know
exactly what the maximum loan amount will be.

For the past three months the average selling price of a staged home was 19% above the listing price while the unstaged home was only 15%. The 4% difference more than paid the staging cost.

Here are the ten secrets fo selling from Marelen Wharmby, a successful home stager:

• Freshen up the home by painting walls a light, neutral color, such as antique white. Lighter colors appeal to a wider range of buyers and make each room look larger.
  
  
• Take a close look at the floor coverings in each room. If you have hardwood floors under the carpet, you will always make money by removing it, even if the floor is not in perfect condition.
  
  
• Allow as much light as possible to enter the room. Open up or remove all draperies, blinds, shades or other window coverings.
  
  
• Removing the clutter of everyday life - all utilitarian items, stacks of paperworks, toiletries, kitchen utensils, electronic equipment and television sets.
  
  
• Remove furniture from each room that does not go with the decor, such as items that stand out too much and items that are worn or of an unappealing color.
  
  
• Place the remaining room furnishings in a way that makes best use of the character of the space. A room should be balanced so that people do not focus on one particular piece of furniture.
  
  
• Now that you've removed the clutter from your home, adding some nice but inexpensive accessories will greatly elevate the perceived value of the home.
  
  
• Clean, clean, clean. Every crevasse within the home should be spotless and gleaming. Even your normal weekly cleaning can not come close to the quality of clean you need.
  
  
• You can't over spend on fresh plants and orchids, elaborate floral arrangements and landscape plants. All these provide a strong addition to the ambience you want to create.
  
  
• Go on vacation! The houses that sell for much higher prices are homes that do not have the slightly disheveled look which comes with showering in the morning and cooking dinner in the evening. Being gone also will lower your level of stress and make the house easier to sell. Think of it this way: Your vacation will actually make you money.

A townhouse is a style of construction, whereas condominium and co-op are types of ownership. A townhouse is basically a building or unit that shares a common wall with the building or unit next door. The walls are usually straight and entry is usually from the ground floor. Townhouses usually have two or more stories. A townhouse can be a style of condominium.

A condo is where you own the actual structure of the building jointly with the other members of the association, along with common areas such as swimming pools, tennis courts or other common areas. Individually, you own the airspace and interior of the structure, but not the building itself. You and the other members of the association own the structure together.

A co-op is where you own shares of a corporation or organization that owns the larger structure, and ownership of those shares gives you the right to occupy a specific unit or apartment.

Welcome to my blog! From time to time I will write articles pertaining to what I know about buying and selling homes in Northeast Georgia, as well as post answers to all of your most frequently asked real estate questions. I hope you will check back periodically for my latest updates and information. In the meantime, if there's any listing on my website that you are interested in, or you are thinking about selling your home, feel free to contact me. I am always happy to assist you with your real estate needs.

Take care and check back again later!

Tony Anderson
Century 21 Community Realty