Category Archives: Mortgages

What Is Owner’s Title Insurance and Why Should I Buy It?

These are both very good questions. Let’s start with the first question and then the answer to the second question will be obvious.

What is Owner’s Title Insurance? It is Insurance that insures you against losses you may suffer as a result of issues affecting the title to your property. When you are buying a property in Massachusetts usually a title examination is completed that complies with MGL Ch 93 Sec 70. Based upon the result of this search a Title Insurance Policy can be issued and a Certification of Title may be issued to you. The Certification is dealing with the record title to your property. It is provided by the law firm closing your purchase. They may also be issuing the title insurance for the transaction.

They can issue two different types of policies. The policies issued in most transactions involving the purchase of real estate are:

  1. Owner’s Title Insurance and
  2. Lenders’ Title Insurance.

The Owner’s Policy protects you and the Lender’s Policy protects your lender. The lender will make you buy their policy, but your policy is optional. Even tough your interests may coincide with that of the lender their policy only protects them in the event of a loss. This often means not until they have acquired ownership of the property. At that point you no longer have an interest in the property.

When you buy your house, you are buying more than just the structure you will live in. You are also buying the property’s legal history. All the good and bad that comes along with it. Any title issue that impacts the property is now your problem. You may be able to look to the law firm that closed your purchase to address the issue or maybe not. There are numerous problems that can impact your ownership of your property that cannot be detected by a title exam and therefore are not addressed by the Certification. These title issues may be covered by your Owner’s Title Policy.

The Owner’s Policy will insure that:

  1. You are the legal owner of the property
  2. That there are no defects, liens or encumbrances effecting your property other than those listed on your policy
  3. In the event that there is a title defect, you may be able to convey your property to a potential buyer if they are willing to accept insurable title
  4. If you are trying to refinance a loan policy may be issued

     

    Things that are covered:

  5. Forgery and impersonation;
  6. Lack of competency, capacity or legal authority of a party;
  7. Deed not joined in by a necessary party (co-owner, heir, spouse, corporate officer, or business partner);
  8. Undisclosed (but recorded) prior mortgage or lien;
  9. Undisclosed (but recorded) easement or use restriction;
  10. Erroneous or inadequate legal descriptions;
  11. Lack of a right of access; and
  12. Deed not properly recorded.

     

    Things that may also be covered depending upon the type of Owner’s Policy you purchased:

  13. Off-record matters, such as claims for adverse possession or prescriptive easement;
  14. Deed to land with buildings encroaching on land of another;
  15. Incorrect survey;
  16. Silent (off-record) liens (such as mechanics’ or estate tax liens); and
  17. Pre-existing violations of subdivision laws, zoning ordinances or CC&R’s.
  18. Post-policy forgery;
  19. Forced removal of improvements due to lack of building permit (subject to deductible);
  20. Post-policy construction of improvements by a neighbor onto insured land; and
  21. Location and dimensions of insured land (survey not required).

Your Owner’s Policy will insure the entire value of the property. It will protect you from any legal action taken against you to enforce a lien or property right to your property. The amount of your coverage may increase each year for the first five years of your policy. It is automatically added to your policy with no additional premium due from you. Your policy will protect you during your entire ownership of the property. It may even protect your heirs depending upon the type of policy you purchased.

You should want to protect what maybe the largest investment of your life anyway that you can. The purchase of Owner’s Policy is that one-time investment that should not be missed. You will have the peace of mind that no matter what the issue that comes up with your property’s title you are protected, and the title company will defend your rights. It is no surprise that your lender requires it and so should you.

New First-Time Homebuyer Loan Program from Freddie Mac. It requires a down-payment of 3%

First-Time Homebuyers have another arrow in their quiver in their attempt to slay the great monster, purchasing their first home. On April 26, 2018, Freddie Mac announced a new loan program targeted at first-Time homebuyers. It is called HomeOne. The Program requires a down payment of 3% and it is provided to otherwise qualified borrowers who are first-time homebuyers. This is not a FHA insured loan but a conventional loan. According to Freddie Mac, HomeOne will be available to borrowers commencing on July 29, 2018, so it misses this spring’s market but it will be positioned for the late summer and early fall seasons.

Freddie Mac’s release stated that “HomeOne mortgage is part of the company’s ongoing efforts to support responsible lending, provide sustainable homeownership and improve access to credit,…The HomeOne mortgage will provide our customers the flexibility they need to help borrowers anywhere in the country achieve the milestone of homeownership and overcome the common down payment resource hurdle. HomeOne is a great solution for aspiring homebuyers to grab that first rung of the property ladder and enjoy the financial and social benefits of participating in homeownership.”

The underwriting of the loans will attempt to make a complete risk assessment based on several factors. It will review credit as it applies to the capacity to repay and the value of the collateral as well as other factors. It was stated that HomeOne mortgage will be offered only for conforming fixed-rate mortgages. The loan must be secured by a single unit primary residence. Not all of the borrowers have to be a first-time homebuyer, but at least one does have to be a first-time homebuyer. According to Freddie Mac it is also adjusting the area-median-income (AMI) limits in an effort to sharpen its focus on low- and-moderate income homebuyers.

So, if you are a first-time homebuyer looking for a property, you may want to consider this loan program. It is also important to note that this is not the only program available to first-time homebuyers nor is it our firm’s endorsement of the program. You should always seek the advice of a well-informed lending professional when you are purchasing a home. Our Firm is prepared to assist first-time homebuyers in their purchase of their home in the Commonwealth of Massachusetts. We want to earn your trust and have you as a client for life.

T&B Trending January 2015

 T&B Logo
T&B Trending January 2015 Vol 1-2015
Top StoryNovember 2014 Job Growth – 7th Best Month in 10 Years Source: Dr. Ted C. Jones

Job growth continues to accelerate into the fall and winter as November 2014 saw 321,000 net new jobs (preliminary) added on a seasonally-adjusted annualized rate. That was the seventh best month of job growth in the past 10-years. Read more >>

In The News

Forecast: Full Steam Ahead for Housing

Source: Themreport.com

The housing market will continue its gradual recovery and gain momentum in 2015 after a disappointing 2014.

Read more >>

What’s Happening

Home Sales, Housing Starts Expected to See Significant Growth in 2015

Source: Themreport.com

Improvements in economic fundamentals, notably employment growth among millennials, will fuel significant increases in home sales and housing starts and a modest rise in home prices in 2015. Read more >>

In Our Neighborhood

First-time homebuyers given more options to buy a home by FannieMae and FreddieMac:

Source: Topkins & Bevans Blog

Earlier this week new lending guidelines for first-time homebuyers were released in a statement by the FHFA Director Melvin L. Watt . Watt wrote “The new lending guidelines released today by Fannie Mae and Freddie Mac will enable creditworthy borrowers who can afford a mortgage, but lack the resources to pay a substantial down payment plus closing costs, to get a mortgage with 3 percent down. Read more >>

Topkins & Bevans
Offices in Boston, Braintree and Waltham Name
rbevans@topbev.com
www.topkinsandbevans.com

Have a Customer with an Underwater Mortgage who Wants to Move Up? One solution I used has worked out to everyone’s satisfaction

We all know how many mortgages are currently “under water” By “under water”, I mean than once the property is sold and selling expenses  and comissions paid, there is no money left over for a downpayment on the “next”home. The mortgage and property taxes are current; the property just has no equity.

Here is a solution I recently developed which worked out well for a client of mine. The client’s parents had excellent credit and had saved up some money. I caused them to purchase, in their names, the property which their daughter had identified as more suitable for her growing family. The daughter entered into a lease with her parents, with market rental rates. She has an option to buyer the bigger home from her parents at a formula price. There is a provision in the lease that every rental payment has a “rent-to-own” coefficient, so the daughter is building up equity in the home she now lives in every time she makes a monthly rental payment United States.

The “under water” residence is now being rented to third parties. Evenutally, when the real estate market comes back, the daughter can sell this home and come out whole. In the meantime, she is receiving income to defray her mortgage and tax expense, whicile she is paying Mom and Dad for the new, more spacious home.

Everybody wins as long as the numbers work out, which in this case, they do. I am not saying that this approach is the “be-all” or the “end-all”. It is, however, a creative solution which has given my clients’ parents a chance to help their daughter without a huge financial sacrifice. There are variations to this theme; perhaps, you can suggest some you have used.

We are not done with this “down” real estate market whatever some of you suggest. There are pockets of progress; there are pockets of stagnation. Creative thinking can many time save the day. We all need to practice it.

Fixed Fees for purchase and sale work—an idea whose time has come

When I first started practicing law, it was accepted practice to bill matters by the hour. After all, the only thing I was selling was my time, and if I spent more time on a matter than I expected, why shouldn’t the client compensate me for that effort? While these axioms remain true, the marketplace has changed, and consumers are now aware that “shopping” for an attorney is no different than shopping for any other service or commodity. Because of these trends, and because I want everyone I represent to believe they have been well served and fairly charged for services, my firm now uses a “fixed fee” approach to almost all real estate transactions. My practice is to enter into an initial discussion with the client to determine the level of complexity of the transaction, and then to agree upon a fee, which will not change even if the transaction goes viral, and I spend more time on the matter than anticipated.

Accordingly, if you work with Topkins & Bevans for the purchase or sale of your home, you will know, up front, what the matter will cost you, and you can factor that expense into your budgeting process.

There are several inherent advantages to this approach:

  1. You and our firm establish a relationship of TRUST, our most important product.

If you believe that you are working with honorable professionals, you will feel comfortable telling your friends and family about us, and that helps Topkins & Bevans to expand our client base. You may also feel comfortable using our firm for other legal matters which may arise, including helping you develop an Estate Plan for your family.

  1. You are not hesitant to email or call when you have a question.

Many people worry about calling when the meter is “on”. They have concerns, but they do not want to expand the amount of their legal fee. Fixed fee billing eliminates that factor from the equation. When the pressure is off, people communicate better. On the other hand, the situations are few and far between where a client takes unfair advantage of the fixed fee approach.

  1. We get all the information from you that we need to give you appropriate representation.

Our firm has real estate experience at almost every level. We have completed condominium conversions. We have prepared subdivisions. We are familiar with current lending practices. None of this expertise will help you unless we know all the facts of your situation. When you are not worried about the added cost, you can open up and give us good information. That usually translates to our being able to give you effective representation.

If you are considering buying or selling a home, we would love to hear from you. We will work with you on a fixed fee basis and even defer payment of some, or all, of your fee until the closing. There is nothing better in our line of work than a satisfied client, and that is what we aim for, each and every time.

Own a Home?—Some things to Consider

Home-ownership is often complicated, and never exactly what you expect. Nothing you have done previously in your life can prepare you totally for owning a home. Don’t get me wrong: there is not a greater believer in home ownership than I. All I am saying is that there are some definite steps you should be taking, and moves you should be making, and the sooner you get things organized properly, the easier you will find the home ownership experience. Here is my list of “do’s” and “don’ts”, in no particular order of importance:

  1. DO file for a Homestead. I do deal with Homesteads each and every day. There is no downside to recording the Homestead Declaration, unless you think a $100 dollar investment to protect $500,000 is not a good deal. How you will employ your Homestead when it is necessary is not something you can predict. Just understand that you only need to file a Homestead once, and it will endure through countless refinancing transactions. A Declaration of Homestead is truly “the gift that keeps on giving”.
  2. DON’T be a careless record keeper. The current tax laws are extremely favorable to middle-class America. If you have lived in your home for at least 2 of the last 5 years, you can sell your home and not pay any capital gains tax to a maximum exclusion of $250,000 for a single person and $500,000 for a married couple. Especially these days, that exclusion covers most of us, and we can make one, two or more transactions without any concern for paying the tax man. Well, there is no guarantee that our law makers will continue this tax benefit forever. What if fiscal needs require the termination of this program? Are you ready to recreate your tax basis in your home? Do you have records of improvements and additions which can be added to your tax basis? The time to determine whether you do is NOW, not when you are staring down the barrel of a tax audit.
  3. DO be a believer in preventive maintenance. Letting needed repairs slide is not a good idea, even in a recession. If your roof is not sound, or you need new windows, get the work done before greater woes befall you. You may find that the payback with new windows on energy costs justifies the expense. Ditto with needed insulation. Attend to these items as they are needed. You will receive the benefit.
  4. DON’T wait too long to consider Elder Care transactions with regarding your home. If you are fortunate, and have children you can trust, you may want to consider getting your home out of your name and into a Grantor Trust. These Trusts can be helpful later on, but there are waiting periods in place to prevent abuses and every time they change, they seem to get longer. Don’t let this go so that when you decide you want to make a move, you too close to need attendant care to insulate your assets. Again, each circumstance is different, but certainly 60 years of age is not too early to start planning.

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