What Is Title Insurance?

First published on Realtor.com

A home’s title may be a lesser-known detail of the real estate transaction, but it can cause a home sale to fall apart. Ask any real estate agent whose client has tried to close on a home without a “free and clear” title—meaning the property doesn’t have any liens or other ownership disputes. As the American Land Title Association points out, even President Abraham Lincoln’s family lost two homes due to title issues.

It can happen to anyone.

Title insurance is like an extra safety net protecting homeowners from potential property issues that could arise over the course of ownership. This could include claim disputes or unpaid liens from previous owners, or even clerical errors in public property records.

Title companies estimate that 36% of real estate transactions involve complex title issues that need to be resolved prior to closing, according to NDP Analytics, an economics research firm.

Real estate professionals can play a critical role in educating their clients about what title insurance is and why it’s essential to a smooth and secure transfer of a property.

How Much Does Title Insurance Cost?

Lenders typically require a buyer to purchase title insurance during the mortgage process. Title insurance protects the lender’s investment in case any issues arise that could affect their ability to collect on the loan later.

Title insurance is often an added cost when purchasing a home, and real estate professionals can help their clients plan ahead. Title insurance costs can vary, but the average is 0.42% of the property’s purchase price, according to Fannie Mae. (To estimate costs, First American Title offers a title insurance calculator.) This one-time payment can typically be rolled into closing costs.

In some areas, it may be customary for home sellers to pay for title insurance on the buyer’s behalf. Title insurance can be a point of negotiation in a real estate transaction.

Real estate professionals should be prepared to respond to buyers’ questions and present title insurance as an important financial piece of a secure real estate transaction, which also includes managing escrow accounts, earnest money deposits and more.

How to Shop for Title Insurance

• Gather quotes from multiple companies. There are several websites to begin a search for title insurance, including Closing.com, EasyTitleQuote.com and FreeTitleQuote.com. Also, buyers may ask their lender or real estate agent for recommendations.

• Ask about any extra fees as well as discounts that may be offered. Companies may offer discounts if the home has been resold within only a few years of the last purchase.

• Check that the title insurance company has a favorable Financial Stability Rating® with Demotech, Inc., the leading title insurance rating company.

Understanding Title Insurance: What It Is and How It Works

Title insurance is a key component of a real estate transaction, and it’s important to be aware of common terms.

Title Insurance Glossary

• Abstract of Title: This is a summary of the public records detailing the property’s ownership history. It could include past owners, mortgages, liens and any legal issues attached to the property over the years.

• Chain of Title: This shows the sequence of ownership for the property, tracing the transfer of title from the original owner to the current owner.

• Title defect: Also called “cloud on title,” this refers to any issue or problem uncovered in the property’s ownership records that could potentially impact the buyer’s right to purchase the home. Title defect issues could include unsettled claims from previous owners, forged signatures on documents, or unresolved liens and unpaid taxes.

• Lein: This refers to a claim or legal right that is brought against the property. It’s often used to describe a collateral for a debt. A lien can delay a home sale if it isn’t paid off to settle the previous debt prior to closing.

• Title search: This is the process of examining public records to verify the chain of title and identify any potential ownership issues, claims or disputes against the property. This will be conducted prior to a home sale.

• Escrow account: This is a neutral third-party account where funds—such as the buyer’s earnest money deposit, closing costs or loan funds—are held during a real estate transaction. The escrow account helps ensure all the finances involved in the transaction are securely handled before the property’s title is transferred to a new owner.

• Indemnity: This is a legal agreement that protects the title insurance policyholder from financial loss if title defects are found. Indemnity could be for the buyer or the lender, depending on the type of title insurance.

• Survey: This is a formal measurement of a property’s boundaries. A survey of the property can uncover issues like encroachments on property lines or easements (rights others have to use part of the property). Boundary disputes can lead to title issues.

Types of Title Insurance

There are two main types of title insurance: Owner’s title insurance and lender’s title insurance. They offer two distinct benefits that home buyers should carefully consider before purchasing.

Lender's Title Insurance

Lender’s title insurance protects the lender—the bank or financial institution that is funding the buyer’s mortgage—in case any title disputes or defects are discovered after a transaction closes. It’s a way for lenders to protect their investment. Lenders typically require buyers to purchase this type of title insurance when approving a mortgage.

Lender’s title insurance only covers the lender’s financial interest in the property (aka the loan balance); it does not cover the homeowner’s full investment. Lender’s title insurance gives the lender the ability to recover the balance of the loan or extra costs when resolving title disputes.

Benefits of lender’s title insurance:

• Protects the lender’s investment from any potential title disputes for the duration of the loan;

• Safeguards the lender’s investment up to the loan amount;

• Allows the lender to proceed with foreclosure more easily if needed. If the borrower defaults on the loan, the lender may proceed without title issues getting in the way.

Owner's Title Insurance

Owner’s title insurance protects the buyer of the home from possible title issues or disputes that could arise after the home purchase. It protects the owner’s financial investment for the entire length of ownership. Owner’s title insurance, however, will not cover issues that buyers were aware of prior to the sale.

Owner’s title insurance is optional in a real estate transaction. But buyers may opt to purchase it for greater protection from financial losses if title issues arise. Owner’s title insurance also provides coverage to the homeowner for as long as they own the home, unlike lender’s title insurance–which will last only for the duration of the loan.

Benefits of owner’s title insurance:

• Provides assurance that homeowners are protected from financial losses if title issues surface, including potential legal costs;

• Protect owners if issues arise from previous owners, such as unpaid liens or hidden ownership claims;

• Offers coverage from title issues for the duration of ownership.

What Does Title Insurance Cover?

Title defects can surface years after completing a home purchase, and they tend to be complex and costly to resolve. A title search prior to closing doesn’t always uncover every potential problem. Therefore, title insurance provides extra assurance that if any future claims arise, homeowners are still protected. It’s also added protection for the lender’s investment, particularly if the borrower has a large loan and high loan-to-value ratio that could expose them to added risk.

Coverage Details

If a title defect or claim arises after the buyer purchases the property, title insurance typically will pay for any legal costs and financial losses that owners could face in resolving the issue and clearing the title.

Whether obtaining owner’s title insurance or lender’s title insurance, policies typically cover some of the following scenarios:

Unpaid liens or mortgages

• Example: A new owner learns that the previous owner failed to pay a contractor’s lien for remodeling work that was completed on the home years ago. The contractor now approaches the new owner trying to collect on the debt.

• What is typically covered: Title insurance would cover the cost of resolving the lien as well as any legal actions needed to clear the title.

Forged documents

• Example: A seller forges a signature on the deed of the home when selling it to a buyer. The fraud is discovered years later, and it is determined that the property has been sold illegally.

• What is typically covered: Title insurance would help resolve any claims if the deed, powers of attorney or other documents involved in the property’s transfer are found to have been forged or altered. Forged documents could make the transfer of property invalid. Title insurance would cover the legal costs to resolve the dispute and correct or clear the title. In some cases, title insurance may even compensate the owner for financial losses from the dispute.

Claims from missing or unknown heirs

• Example: A seller inherits a property from a relative, unaware of a distant uncle who also has been named the heir to the property. After the home is sold, the uncle claims ownership of the property.

• What is typically covered: Title insurance protects against claims by missing heirs or relatives who weren’t previously uncovered during the title search. The title insurance policy will protect the new owner from legal and financial burdens in clearing the title.

Clerical errors in public records

• Example: The wrong address, 5383 Main Street, is recorded instead of the correct address, 5388 Main Street. The inaccurate property description is included in the deed. The error is discovered after the sale is completed.

• What is typically covered: Mistakes and clerical errors in public records—such as misspelled names, incorrect property descriptions or deeds, and data entry errors—are covered in most title insurance policies. Title insurance will cover the owner’s legal and financial costs to correct the error and defend the owner’s title.

Boundary disputes

• Example: A new homeowner builds a fence on what they believe is their property line, but a neighbor later says the fence is on their side of the yard.

• What is typically covered: Title insurance can cover legal and other financial costs in resolving boundary disputes. For example, many policies will cover any needed surveys to determine the property’s boundaries as well as legal fees and the potential financial impact of relocating a fence if it’s found to be encroaching on the neighbor’s property.

Benefits of Title Insurance

Title insurance is a one-time cost in a real estate transaction, but it provides coverage for as long as the buyer owns the property or the length of the lender’s loan. Title insurance protects policyholders from problems that could surface years later on claims of ownership.

For Buyers

Title insurance can offer extra assurance about a home buyer’s ownership rights while helping to avoid costly legal battles if title disputes ever arise. Title insurance benefits buyers in the following ways:

• Protects them against title defects, like hidden liens or ownership disputes made by previous owners.

• Covers title issues later discovered, like fraud or errors in public records.

• Fulfills the mortgage lender’s requirement. Most lenders require title insurance in approving a mortgage.

• Provides assurance that ownership rights are protected for the duration of ownership or the loan.

For Sellers

Sellers may consider paying for title insurance for buyers in a real estate transaction, which helps lower costs for the buyer and makes the property more attractive.

Here are some potential benefits for sellers in paying for title insurance in a transaction:

• Provides assurance that the home has a clear title and all issues have been resolved before the home sale;

• Reduces legal risk by protecting the seller from potential future legal claims against the property after the sale;

• Helps expedite closing. Clearing the title may give lenders and buyers greater confidence to proceed with the sale;

• Increases the marketability of the home. Sellers can offer title insurance to make their listing more appealing and avoid closing delays from ownership disputes.

Title insurance is an important element in a transaction—but it’s only one financial piece of a home purchase. Title insurance will not help with the immediate financial costs buyers may face when purchasing a home, like the down payment, closing costs or monthly mortgage payments. Loan and grant options for first-time buyers can help make homeownership more affordable.

Common Myths About Title Insurance

Real estate professionals can be an important information source on title insurance for their clients, helping to clear up confusion or misperceptions.

Myth: Title insurance is unnecessary because any issues will be discovered during a title search prior to a home sale.

Reality: A thorough title search often is conducted prior to a home sale, but it doesn’t always turn up every issue. Title searches are based on public records, which could be missing hidden liens or contain fraudulent information or unnoticed clerical errors. Title insurance can protect new owners from issues that could surface years following a home sale.

Myth: Title insurance is too expensive.

Reality: Title insurance is a one-time fee paid at closing, which can be negotiated with a seller or rolled into a buyer’s mortgage with other closing costs. The cost typically ranges from 0.5% to 1% of the property’s purchase price. That could amount to anywhere from $2,000 to $4,000 for title insurance on a $400,000 home. While it is an added expense, home buyers may find that it’s a small price to pay for the long-term protection from financial losses if title issues are ever found. Without title insurance, homeowners could be on the hook for paying tens of thousands of dollars to resolve title claims on their own.

Myth: Title insurance only benefits the lender, not the owner.

Reality: Lenders typically require buyers to purchase what’s known as “lender’s title insurance” to protect the loan amount the lender has invested in the home. But it also can provide some protection to the buyer if hidden liens from the previous owner or other ownership disputes arise. Buyers may wish to purchase “owner’s title insurance” to protect their full investment for the entire length of ownership. Lender’s title insurance coverage will last as long as the buyer has the loan.

Myth: Title insurance is the same as homeowners insurance.

Reality: These provide two different types of coverage and protection for homeowners. Homeowners insurance protects against risks to the home’s physical structure, such as in the case of a fire or theft. Title insurance, on the other hand, protects against problems related to the home’s ownership, such as undiscovered liens from previous owners.

Myth: The seller is responsible for paying for title insurance.

Reality: In some areas of the country, it may be customary for sellers to pay this cost for the buyer—but not always. Who pays for title insurance can be negotiated between the buyer and seller in the real estate transaction. In some cases, both parties may end up chipping in: The buyer may pay for owner’s title insurance while the seller pays for lender’s title insurance.

Myth: Title insurance is not needed for newly built properties.

Reality: Just because a home is newly built doesn’t mean it’s clear of all title issues. Problems can still surface, like if the land the house was built on has unpaid liens from contractors or subcontractors, encroachments on easements, or even fraud or forged documents.

Myth: Title insurance policies are all the same.

Reality: Not all title insurance policies are identical. Specific terms, coverage and exclusions can vary from company to company. Home buyers are urged to shop around to compare premium rates and policy terms, like exclusions, endorsements and coverage limits.

Myth: Title insurance only protects you before the sale is finalized.

Reality: Title insurance is a one-time fee but can provide coverage as long as the buyer owns the property or the length of their mortgage (depending on whether they have owner’s or lender’s title insurance). So, if an issue pops up years after closing—say, a long-lost heir suddenly makes a claim of ownership on the property—title insurance will still protect the owner.

Closing Time: 6 Steps Every Homebuyer Should Expect

First published on Old Republic Title Blog

Get owner's title insurance and buy your home with confidence

Your long home-buying journey is almost over. You found the home you love, the seller accepted your offer and now it's time for closing. Of course, there's a lot to think about right now, and the last thing you want is something to go wrong. So make sure you work with an experienced closing agent to help ensure the details come together and everything runs smoothly.

As soon as the sales contract is signed, the behind-the-scenes work can begin. The closing process usually takes 30 to 90 days. Read on to learn what happens during each stage of the process. 

1. Select a Closing Agent

   If you're working with a real estate agent, with your permission, he or she may place an order with a closing agent as soon as your sales contract is accepted. The closing agent can be a title company, an escrow company or a settlement company.

   Most homebuyers rely on their real estate agent to select a closing agent – someone they work with regularly and know to be professional, reliable and efficient. However, you can choose your own closing agent if you wish. The closing agent will oversee the closing process and make sure everything happens in the right order and on time, without unnecessary delays or glitches.

2. Draw up an Escrow Agreement

   First, a contract or escrow agreement is drafted, which the closing agent reviews for completeness and accuracy. The closing agent will also put your deposit into an escrow account, where the funds will remain until closing.

3. Title Search is Conducted

   Once the order for title insurance is placed, the title company conducts a search of the public records. The search should identify any issues with the title such as liens against the property, utility easements and so on. If a problem is discovered, most often the title professional will take care of it without you even knowing about it. After the title search is complete and certain requirements are satisfied, the title company can provide a title insurance policy.

4. Shop for Title Insurance

   There are two kinds of title insurance coverage: a Lender's policy, which covers the lender for the amount of the mortgage loan; and an Owner's policy, which covers the homebuyer for the amount of the purchase price. If you're obtaining a loan, the bank or lender will typically require that you purchase a Loan policy. However, it only protects the lender. 

   It is always recommended that you obtain an Owner's policy to protect your investment. The party that pays for the Owner's policy varies from state to state and can be a negotiable item in the sales contract, so ask your settlement agent for guidance before closing.

5. Obtain a Closing Disclosure
   Your lender or your closing agent at your lender's instruction must provide a Closing Disclosure to you at least three days prior to consummation of the loan, which in some states may be the same time as closing. The Closing Disclosure provides disclosures that help you understand all costs of the transaction, including key information like the interest rate, monthly payments and costs to close the loan.

   If you or your lender makes certain significant changes between the time the Closing Disclosure form is given to you and consummation, you must be provided a new form and an additional three-business-day waiting period after receipt of the new form. This applies if the creditor:

    - Makes changes to the APR above ⅛ of a percent for most loans (and ¼ of a percent for loans with irregular payments or periods)

    - Changes the loan product

    - Adds a prepayment penalty to the loan

    - If the changes are less significant, they can be disclosed on a revised Closing Disclosure form provided to you at or before closing, without delaying the closing.

6. The Finish Line: Prepare for Closing
   As closing day approaches, the closing agent orders any updated information that may be required. Once the closing agent confirms with the lender and the seller, he or she will set a final date, time and location of the closing. 
   
   On closing day, all of the behind-the-scenes work is complete. While you've been busy packing, ordering utilities and coordinating the movers, your closing agent has been managing the closing process so that you can rest assured, knowing all the paperwork is in order.

More Homebuyer Tips & Information

The American Land Title Association helps educate homebuyers like you about title insurance so you can protect your property rights. Check out www.homeclosing101.org to learn more about title insurance and the home closing process.

This article offers a brief description of insurance coverages, products and services and is meant for informational purposes only. Actual coverages may vary by state or locality. You may or may not be eligible for all of the insurance products, coverages or services described in this article. For exact terms, conditions, exclusions, and limitations, please contact your local Old Republic Title representative for more information.

Consumer Guide: Homeowners Associations

originally posted on National Association of Realtors

In many housing markets, homeowners associations (HOAs) and other community associations can be a part of the homebuying (and owning) experience. Here’s what prospective buyers should know:

What are HOAs?

HOAs are organizations in residential communities that create and enforce rules for the properties and residents within their purview. HOAs can offer residents access to shared spaces and facilities, such as pools or clubhouses, and act as governing boards to help maintain these common areas. While HOAs are often associated with master-planned neighborhoods or gated communities of single-family homes, community associations can also include some shared properties with individual units such as townhouses and condos.

What are HOA fees and special assessments?

Homeowners in HOA communities are required to pay monthly fees (sometimes paid quarterly or annually). These may be used to cover the cost of landscaping, routine maintenance, neighborhood upkeep, shared amenities and common areas, and other operational expenses—including contributing to reserves to plan for and fund longer-term improvements or unplanned costs. HOAs may also collect special assessments for costs such as emergency maintenance needs or other major projects that reserves are unable to cover. As such, prospective homeowners should consider HOA costs when budgeting and preparing for homeownership.

Who runs HOAs?

Most HOAs are non-profits run by volunteer boards. Volunteering for the HOA in your neighborhood or building can provide better insight into how your HOA is run, allowing you to participate in important community decisions. HOAs have bylaws that guide how they function, including election rules, board member responsibilities, and meeting protocols.

What kinds of rules can HOAs enforce?

In addition to bylaws, HOAs have covenants, conditions, and restrictions (CC&Rs) and rules and regulations to help maintain uniformity and protect real estate prices. These can vary significantly, but may cover things such as landscaping, noise, parking, pets, home exteriors (including decorations), property modifications, and common area policies. That said, there are limitations to HOA rule enforcement; specifically, HOAs cannot enforce rules that conflict with local, state, or federal law.

Do condo associations differ from HOAs?

Condos, or condominiums, are a type of building or complex that can have HOAs or condo associations. A key difference between single-family homes in HOA communities and condos is the ownership structure. Typically, condo buyers purchase the units they live in and an ownership interest in the building’s common areas; in contrast, owners of individual properties in an HOA community own their property and lot, but common areas are owned by the HOA itself. However, exact ownership structures can vary.

What are co-ops?

Co-ops, or cooperative housing, are a type of shared ownership arrangement that only exists in certain states. Unlike condos, people living in a co-op own shares in the entire complex and have a proprietary lease on a specific apartment. Interested buyers must apply and be approved by the co-op board, which is made up of other residents.

What are the benefits and drawbacks of HOAs?

Many prospective buyers are drawn to the amenities, enhanced security measures, and maintenance support that HOAs can offer. However, the added costs of HOA fees and special assessments can be a financial burden for some buyers, and others may be concerned about potentially restrictive regulations. Your real estate agent can help you determine if an HOA community is right for you based on your needs and preferences.

Practices may vary based on state and local law. Consult your real estate professional and/or an attorney for details about state law where you are purchasing a home. Please visit facts.realtor for more information and resources.

NOTE: Consumer guides do not constitute any change in NAR policy. Real estate professionals must ensure they market properties consistent with relevant MLS rules and educate sellers on the choices available.

Consumer Guide: Mortgages and Financing

originally posted on National Association of Realtors

NOTE: Consumer guides do not constitute any change in NAR policy. Real estate professionals must ensure they market properties consistent with relevant MLS rules and educate sellers on the choices available.

Buying a home is one of the largest personal and financial decisions you can make. For many buyers, the process includes finding a loan that will help you pay for your new home over time. An agent who is a REALTOR® can help you learn about your options. Here’s what else you need to know:

What is a mortgage, and how do I get one? 

A mortgage is a loan offered by a bank or lender that lets you borrow money to purchase a home and repay over time with interest. Mortgages can take many forms, but one of the most popular options is a 30-year fixed rate mortgage. Many factors can affect the mortgage options available to you, including your down payment, personal finances (e.g., credit score, income, existing debt, employment history), and other factors like government policies, current interest rates, and what lender you are working with. Certain buyers, like first-time homebuyers and veterans, might be eligible for special financial assistance programs.

What types of loans are there? 

Factors like where you are searching for a home and how long you plan to stay in your new home will help determine which loan type best suits you. Some options include:

• Fixed-rate mortgage: Sets an interest rate and monthly payment for the life of the loan, which is typically 15 or 30 years.

• Adjustable-rate mortgage (ARM): ARMs may offer interest rates that are lower than you could get with a fixed-rate mortgage for a chunk of the life of the loan, such as five or 10 years. However, after that point your interest rates are subject to change approximately once per year based on market conditions.

What is a down payment, and how much will it be? 

Some lenders require buyers to pay a percentage of the home’s purchase price up front, which is known as a “down payment.” Your down payment can vary substantially depending on your mortgage agreement. Typically, if you pay more money up front, your monthly mortgage payment will be lower. Many local governments and non-profit organizations offer down payment assistance grants and loans if you meet certain requirements. Ask your agent or reach out to your local REALTOR® association for recommendations and guidance on what’s available.

What is the difference between conventional and federal home loans? 

Conventional loans are financed by private lenders, such as banks, credit unions, and mortgage companies. They require stronger credit and higher down payments but may offer better rates. Federal loans are government- backed, meaning lenders carry less risk and can pass savings onto eligible borrowers who may not have pristine credit. Some federal loans include:

• Federal Housing Administration (FHA) Loan:FHA loans cater to first-time buyers and have flexible requirements and down payment options as low as 3.5%, depending on your credit score or debt-to-income ratio.

• Department of Veterans Affairs (VA) Loan: If you served in the U.S. military, you are eligible for a VA loan with no down payment and no mortgage insurance requirements.

• U.S. Department of Agriculture (USDA) Loan: The USDA Rural Development loan is designed for families purchasing a home in rural areas, requires zero down payment, and offers discounted mortgage interest rates.

Are there other ways I can lower my out-of-pocket costs? 

Some sellers may offer to pay certain costs associated with purchasing a home for you, which are called concessions. Certain limits apply to concessions—please consult our guide to seller concessions for more information. You can also ask the seller to pay for your agent’s compensation, which does not count towards concession limits, as part of your purchase offer. Both are options that may reduce out-of-pocket and upfront expenses, helping you stretch your budget. However, keep in mind that the current banking system does not allow for agent compensation to be financed through a mortgage. Talk to your agent about building a home purchase plan that works with your budget.

Practices may vary based on state and local law. Consult your real estate professional and / or an attorney for details about state law where you are purchasing a home. Please visit facts.realtor for more information and resources.

5 Financial Solutions for First-Time Buyers

By: Wendy Rose Gould Published on Realtor.com on May 28, 2024

It’s no secret that housing costs have become increasingly expensive over the past few years, and there’s no sign of a drastic market change anytime soon. Hopeful first-time buyers are arguably experiencing the crunch more than anyone else, with many feeling like their long-held dream of purchasing real estate is simply out of reach. What clients may not realize is that there are numerous financial solutions available that can alleviate some of the financial burden. Ahead, we’re sharing viable options to explore with your buyers.  

Down Payment Grants

The standard 20% down payment isn’t always feasible for first-time home buyers, turning them off from the idea of purchasing a home altogether. If this is the case for your client, investigate available down payment assistance options.

 “[Many] lenders have grant programs or down-payment assistance—and in certain cases zero down even for a non-veteran—for first-time buyers who are strapped for cash but desire to own a home,” says Tia Coates, a real estate professional based in Phoenix, Arizona. “There are also zero-down loans for USDA and VA loans for veterans.”

 She says that some grant programs vary state-by-state, but that federal programs from agencies like Fannie Mae and Freddie Mac are available across the country. In some instances, grants of $5,000 or more are available. 

Group Economics

Amid ongoing housing supply challenges and rising prices, many first-time homebuyers are turning to joint ventures or “group economics” in lieu of a solo purchase. In real estate, starting somewhere is crucial, and collaborating as a group often enables greater progress versus acting alone.

 “Typically involving two to four individuals, this strategy entails pooling financial resources and collective purchasing power to acquire property,” says Isaiah Hazward, director of sales for the Coalition Properties Group in Washington, D.C. “By combining their resources, individuals who may lack sufficient funds individually can achieve homeownership collectively.”

Along with getting into a home, this strategy reduces overall financial risk since costs and ongoing maintenance are shared equally among participants. Coates adds that an alternative to this is to utilize a co-signer—such as a parent with well-established credit—to help offset the closing costs and down payment.

NACA Purchase Program

The Neighborhood Assistance Corporation of America (NACA) is a non-profit organization committed to “closing the racial wealth disparity gap through character-based lending.” The nationwide program serves as an economical solution for low-to-moderate income earners buying for the first time.

 “With a proven track record of over $20 billion in mortgage commitments, NACA offers fixed-rate mortgages featuring below-market interest rates, waived down payment and closing costs, and no mortgage insurance, which often creates an increase in purchasing power when compared to traditional loans with mortgage insurance requirements,” explains Hazward. 

Additionally, NACA provides complimentary credit counseling services with no minimum credit requirements for purchases.

Unconventional Purchases

The current housing market guarantees some pretty stiff competition, particularly for first-time home buyers who may not have as much financial leverage compared to those coming in hot with full cash offers. In this case, it may make sense to look into less conventional avenues.

The first option is to consider bank-owned properties in your search, says Tezeta Roro, a real estate professional based in New Jersey. “While the process, decision makers, and paperwork involved is often different from buying from a private owner, it can be a good option for first time homebuyers who may have a hard time competing in the current market due to low down payment,” she says.

Another option is to consider buying from a family member or friend you know. This helps eliminate some competition and can serve as a win-win since it maintains generational wealth. To that end, Roro adds that those looking to downsize can potentially leverage the 1031 exchange tax code to postpone capital gains taxes and buy a property that can be written into a will to be gifted to the adult child, making it a tax-free gift upon death.

Negotiated Seller Concessions

When people talk about what they can afford, they often have a monthly mortgage payment in mind. Coates says that negotiating seller concessions is vitally important to saving your client hundreds of dollars each month. 

“In some areas, we still see sellers willing to pay closing costs for buyers, which helps offset how much the buyer needs to bring to the table,” Coates says. Other examples of seller concessions include covering some maintenance or home repair costs prior to closing, contributing to the down payment, including furniture or appliances in the sale, or buying down the interest rate.

If your clients are feeling the pinch of soaring home prices and inflation, consider whether any of these solutions can relieve financial tension and get them in their dream home sooner than they imagined.

Wendy Rose Gould is a veteran freelance lifestyle reporter based in Phoenix, Arizona. She covers home, travel, and wellness for outlets such as Martha Stewart Living, Real Simple, Insider, TODAY, and others. Wendy received her journalism degree from Franklin College’s Pulliam School of Journalism and has a second bachelor’s degree in philosophy. You can learn more about her at wendygould.com and follow her on Instagram @wendyrgould.

Design Choices Sellers Might Want to Rethink

Published in Realtor Magazine April. 29, 2024 by Barbara Ballinger

Social media causes a lot of hype, but trends change frequently and could hurt resales. Sellers are wise to play it safe with timeless simplicity.

Three Key Takeaways

• Not everyone loves pastel colors, scalloped furniture or up-cycled pieces, so suggest sellers set aside such items during showings

• What appeals to a wider audience are mainstream classics like monochromatic color palettes, one accent wall and overall simplicity

• Remind sellers the goal is to play up space rather than show off personal possessions

You’ve cautioned your home sellers that the pastel pink upholstered sofa they love because it’s oh-so-Barbie-ish, won’t fly with most buyers. You’ve also warned them that their attraction to antique farmhouse items is great, but the style is light-years from the modern American farmhouse vibe that many now favor since it looks so much fresher and hip. You also empathize with them about their deep attachment to their possessions and how difficult it can be to store them away during showings.

But then it’s time for some brutal honesty. Selling a house is business, and ignoring what’s in and out of favor with the widest pool of buyers may hurt the bottom line. Chris Heller, a real estate expert and co-founder of Agent Advice, based in Austin, Texas, offers a list covering the decor styles that are the least-searched-for and most off-putting by a percentage of site visitors over the last year.

Pastel Colors

Top on the list of least-liked were pastel colors. And it wasn’t just Barbie pink; light blue and lilac both took a hit as well. 

Scalloped Furniture

Next was scalloped furniture, which rose in favor last year among homeowners who liked vintage, doll-like or mermaid-style aesthetics, whether in pillow or bed covers, rugs, curtains or any other place the motif could be introduced. Don’t tell Ariel of “Little Mermaid” fame, however.

Antique Farmhouse Decor

Third was antique farmhouse decor, whether it was full on or using the associated elements of wall paneling, hardwood flooring or rustic brass hardware.

Upcycled Furniture

Fourth was upcycled furniture, which once appealed to those thrifting or repurposing vintage pieces, often from flea markets and consignment shops, to be creative and save money.

Industrial Elements

Fifth was industrial elements, which had come and gone before due to the popularity of factory- and loft-style exposed bricks, high ceilings, wooden floors, open layouts and oversized windows. When they first appeared in the 1960s and 1970s, many artists made them popular in their gritty urban homes. That look came to influence even suburban decor for a while. Recently, its popularity returned, but still, some consider the look too cold and austere.

The remainder of the 10 most out-of-favor designs included Scandinavian decor (yes, hygge), botanical wallpaper, vintage decor, gold cabinet hardware (just when you’ve removed chrome and nickel pulls and knobs to add gold), and geometric wallpaper.

Heller offers this additional caveat against using social media as a design influence. “The data shows the short-lived appeal of trends that rise to prominence of social media, which will attract some, but likely not the majority,” he says. Furthermore, this may also be due to generational preferences, with the biggest supporters of fleeting trends typically younger home buyers.

Data from Google compiled and analyzed by Heller’s team also revealed what potential buyers are interested in: an accent wall that can visually alter the size, shape and feel of a room depending on its color; pendant lighting with oversized fixtures rather than yesteryear’s three small ones; minimalist elements, such as monochromatic color palettes; natural light; and open floor plans, which have appealed for years and remain on trend, though some also like having a niche available for some privacy.

Influencing all of these looks is the desire for simplicity, with Heller recommending a fine line between that and the potential for a lack of personality or warmth. His recommendation? “Opting for warmer neutral tones, plenty of natural light, and removing clutter that may distract from the potential of your home.”

Why should this matter now when inventory is still tight?

The months from March through May are considered the best time to sell a home, and how a home looks can affect potential offers. According to Heller, “Many buyers will be willing to pay more for an aesthetically pleasing property, as it requires less immediate renovation or redecoration.” He continues, “Staging your rooms in a way that feels inviting and comfortable makes it easier for buyers to imagine themselves living in the property, whether viewing it in person or online. Hence, the decor is really key.”

How Mortgage Brokers Help Real Estate Agents Win

originally posted on National Association of Realtors on November 10, 2023

By: FindAMortgageBroker.com

Want to strengthen your professional relationships, expand your referral network and get to the closing table faster so you can get paid sooner? As a new real estate professional, you can set yourself up for early success by partnering with an independent mortgage broker in your area. Here’s how they can help you win more clients:

Quicker Turn-Around Times

Independent mortgage brokers can typically close loans 2-3 times faster than the industry average. Most big banks and direct online lenders have average turn times of 45-60 days, but mortgage brokers can typically close a loan in 15 days or less. This is thanks to their partnerships with wholesale lenders who focus on efficiency and service. This faster process has great benefits including a decreased likelihood in your losing a deal because of long closing times. Additionally, your buyer moves into their dream home faster, and your payday arrives sooner.

More Buying Power

A customizable loan product allows your buyers to get the home and the loan that best fits their needs and their wallets. Mortgage brokers can offer more loan options – often with better pricing – because they have access to a variety of wholesale lenders. Big banks and direct online lenders only offer one set of products, limiting your clients. Working with a mortgage broker makes it more likely your buyers will find the right loan solution for their financial situation, usually with a lower monthly payment – which can mean more buying power. Finding an ideal loan option for your buyer rather than trying to fit them into a pre-selected box makes your buyer feel like a person rather than a number.

A Seamless Process

The convenience and personalized service that mortgage brokers bring to the table can go a long way. For example, if your buyer goes to a bank for their mortgage, they’re at the mercy of a mortgage banker who likely works during standard bank hours at a set location. Mortgage brokers, on the other hand, are local independent entrepreneurs who set their own hours, are accessible whenever questions come up and have the flexibility to meet when and where it’s best for their clients. Plus, they’re your buyer’s personal advocate, taking on the heavy lifting of navigating complex financial situations and making the entire process smooth and worry-free.

Unmatched Expertise

Because independent mortgage brokers are licensed experts who only focus on home loans, they can reliably match your clients with the right loan products. Mortgage brokers can support borrowers in a number of situations – they’re skilled at helping self-employed borrowers and those with second jobs in the gig economy, as well as first-time homebuyers or those with challenging credit histories. Finding the right loan can transform a renter into a buyer, and nets you a grateful client ready to refer more business.

There are many reasons to work with an independent mortgage broker, and it’s easy to connect with one in your area. Visit FindAMortgageBroker.com to learn more about the advantages of working with a mortgage broker and find your partner today.

This is a sponsored post submitted by findamortgagebroker.com. The representations, information, advice, and opinions presented by YPN Lounge authors, sponsors, or advertisers are solely their responsibility. Read REALTOR® Magazine’s sponsored content disclaimer policy.

The FAQs of Title Insurance For Homebuyers

Published on Old Republic Title website

For most of us, a home is the largest investment we'll make in our lives. To buy with confidence, get owner's title insurance. It's the smart way to protect your property from legal claims. To help you understand how owner's title insurance works, here are answers to common questions.

What is title?

Title is your right to own or use your property. Title also establishes any limitations on those rights.

What is a title search?

A title search is an early step in the homebuying process, conducted of the public records, to uncover issues that could limit your rights to the property. If a title issue is discovered, most often your title professional will take care of it without you even knowing. After the title search is complete, the title company can provide a title insurance policy.

What is title insurance?

If you're buying a home, title insurance is a policy that protects your investment and property rights.

There are two different types of title insurance: an owner's policy and a lender's policy.

1. An owner's policy is the best way to protect your property rights. Either the buyer or seller may pay for this policy. Ask your title professional how it's handled in your area.

2. A lender's policy is usually required by the lender and only protects the lender's financial interests. The buyer typically pays for this policy, but that varies depending on geography. Ask your title professional how it's handled in your area.

Why should I purchase owner's title insurance?

Owner's title insurance protects your investment in your property from certain future legal claims regarding ownership of your property. For a one-time fee, you and your heirs receive coverage for as long as you own your home. The owner's policy also covers potential legal fees and court costs for settling claims covered by your policy.

What does owner's title insurance cover?

Sometimes undiscoverable defects can come up after the title search. Under an owner's title insurance policy, you are protected against certain undiscovered errors in the title.

Title issues include unknown:

• Outstanding mortgages and judgments, or a lien against the property because the seller has not paid his taxes

• Pending legal action against the property that could affect you

• Unknown heir of a previous owner who is claiming ownership of the property

Unforeseeable title claims include:

• Forgery: making a false document
  - For example, the seller misrepresents the identity of the person who sold the property.

• Fraud: deception to achieve unfair gain
  - For example, someone steals your identity and either sells your house without your knowledge or consent, or takes out a second mortgage on the property and walks away with the money.

• Clerical error: inconsistent paperwork and historical records
  - For example, an unforeseeable discrepancy in the property or fence line can cause confusion in ownership rights.

What does owner's title insurance cost?

The one-time payment for owner's title insurance is low relative to the value of your home.

How long am I covered?

Your owner's title insurance policy lasts for as long as you or your heirs own your property. Your life will change over time, but your peace of mind never will.

What happens at closing?

Closing is the final step in executing the homebuying transaction. It is the process that allows the transfer of ownership to occur. Upon completion of the closing process, you get the keys to your home!

Where can I get more information?

The American Land Title Association helps educate homebuyers like you about title insurance so you can protect your property rights. Check out www.homeclosing101.org to learn more about title insurance and the home closing process.

This advertising offers a brief description of insurance coverages, products and services and is meant for informational purposes only. Actual coverages may vary by state, or locality. You may not be eligible for all of the insurance products, coverages or services described in this advertising. For exact terms, conditions, exclusions, and limitations, please contact an Old Republic Title representative.