A title search is an early warning system for buyers and lenders. It reveals flaws the owner must resolve prior to a closing or refinance request. This allows the owner to clear any issues on the title so that the process can move forward. Also, it protects the buyer or lender from assuming an obligation they aren’t responsible for.
A chain of title exists in the public records. It shows the history of property title transfer from each previous owner to the next. Unfortunately, these searches are labor intensive and require a specialist called a title examiner.
The search may take the title examiner back to a time when property laws were much different. Technically, only 40-60 previous years are required, but this may omit important information on older properties. Therefore, title examiners typically go back to the original owner.
The second step involves a search of tax records to ensure there are no unpaid taxes that could result in a tax lien on the property. The local municipality could hold buyers responsible if the taxes aren’t paid prior to the closing.
If the title insurance is for a refinance loan, the lender often orders an inspection. The inspector examines the property to investigate whether there are any encroachments or other defects that affect the title. They also verify the lot size, note unrecorded easements and then mark the location of improvements.
Judgment decrees, liens and unpaid federal taxes entail a claim on the property that supersedes a lender’s or buyer’s rights. Therefore, if discovered judgments create a cloud on the title, the current owner must resolve them before the transfer of title to the buyer.
The lender or buyer and seller can proceed with the closing after all defects have been cleared. However, the title company won’t issue a commitment to insure the property if clouds remain on the title.
Understanding how the title process works can make the closing process easier and might make buyers a little more patient while waiting for the title commitment to arrive.
Your trusted real estate agent and home mortgage professional will be there to guide you through the process and help you communicate effectively with your lender. These partnerships can be a key element in your successful transaction.
Last week’s economic reports included National Association of Home Builders’ Housing Market Index, the Federal Reserve’s Beige Book report and the University of Michigan’s Consumer Sentiment Index. Weekly readings on mortgage rates and first-time jobless claims were also released.
Commerce Department readings on housing starts and building permits issued were delayed due to the federal government shutdown, which continued and became the longest government shutdown on record.
NAHB: Builder Confidence Rises Amid Headwinds
Home builder confidence rose two points in January according to the National Association of Home Builders. Builder concerns over rising construction costs and tariffs on building materials were balanced by falling mortgage rates.
Builders felt pressure to create more affordable homes and to offer incentives to buyers that could create more sales. Building new homes is the only solution to the long-entrenched shortage of homes; the Home builder index is closely watched by housing and mortgage industry pros as an indicator of future home inventories and mortgages.
Federal Reserve Beige Book Shows Concern Over Current Economic Conditions
The Federal Reserve’s Beige Book report, which recounts Federal Reserve business contacts’ views of the economy included information from eight of twelve Federal Reserve districts. Business leaders cited higher costs including rising tariffs and costs for supplies. Business growth was slower during December and early January.
Additional concerns cited by the Fed’s business contacts included the government shutdown and conflicts over trade and political policies. Fed contacts reported mixed results with passing on higher costs to consumers. This suggests that consumers are “tapped out,” or are reining in spending among worries over the shutdown and rising costs.
Mortgage Rates Mixed, New Jobless Claims
Freddie Mac reported mixed activity on mortgage rates last week as the average rate for 330-year fixed rate mortgages was unchanged at 4,45 percent. The average rate for a 15-year fixed rate mortgage ticked down one basis point to 3.88 percent. The average rate for 5/1 adjustable rate mortgage rose four basis points to 3.37 percent. Discount points averaged 0.40 percent for fixed rate mortgages and 0.30 percent for 5/1 adjustable rate mortgages.
Fewer first-time jobless claims were filed last week with 213,000 new claims filed as compared to expectations of 220,000 new claims filed and 216,000 first-time claims filed in the prior week.
The University of Michigan released its consumer confidence index for January; consumer uncertainty about economic conditions and the government shutdown caused January’s reading to fall nearly eight points to 90.70. from December’s reading of 98.30 Analysts expected a reading of 97.50, but this may have been based in hopes that the government shutdown would end.
This week’s economic reports are limited by Monday’s holiday and the ongoing government shutdown. Expected readings include sales of new and pre-owned homes along with weekly readings on mortgage rates and new jobless claims.
Buying your home can be nerve-racking, especially if it’s the first time. The buying process is exciting and often complex. The chances of making a mistake are relatively high.
In today’s real estate market where demand surpasses supply, you can’t afford to make mistakes. And this is just the tip of the iceberg.
If you are in the market to buy a house, here are five pitfalls avoid.
Not Doing Your Homework Well
Fortune favors the prepared in real estate. And preparedness begins with understanding your finances. A wise buyer examines assets, analyzes debts and gets finances pre-approved before jumping into the house hunt.
Know the neighborhood well, since you’re also buying a location. It’s paramount to research about the quality of schools, upcoming zoning issues and crime level. Not all suburb spots are ideal to live in.
Picking The Wrong Mortgage
Getting your loan preapproved puts you in a better position to negotiate. Find out how much property you can afford. Don’t rely on your bank’s internet site only. Instead, use calculators and consult with your trusted mortgage professional to find out how much you can borrow.
It’s worth noting that what banks show they can lend can differ from what they will lend. As such, it’s imperative to choose your mortgage carefully. Compare offers from various banks or consult an independent finance broker.
Going With The Market Flow
Resist the temptation to flow with the market rather than your needs. The real estate market goes in cycles. There are times suitable for buyers, and times suitable for sellers.
However, don’t gamble with your future by sitting and waiting for the right time. Once you know your budget, get your finances organized, think about your needs now and in future. Then use short term market conditions to make long-term lifestyle choices.
Exceeding Your Budget
Most homebuyers fall for the trap of picking more appealing properties that cost more than their budgets. Falling into this pitfall can derail your future finances.
Although it’s human nature to yearn for more than we can afford, resist the desire. Surpassing your budget exposes you to potential financial shocks with bigger payments, property taxes and more.
Falling In Love
If you find the perfect house, keep it to yourself. Don’t let the sellers read your emotions. If they do, they may use them against you while negotiating.
Wise buyers know there are several homes out there, and there is one that’s right for them. If you can’t afford one or your offer isn’t accepted, keep looking and move on.
Buying a home is rejuvenating. However, if you’re not careful, you can make mistakes you may regret later. Be sure to consult with your trusted real estate expert and trusted mortgage professional to get the best advice for your situation.
After two months of declining builder confidence, the National Association of Home Builders Housing Market Index gained two points in January with a reading of 58. Component readings of the HMI were also higher with builder confidence in current market conditions rose two points to an index reading of 63. Builder confidence in housing market conditions over the next six months rose three points to 64.
The index for buyer traffic in new housing developments rose one point to 44. While index readings above 50 indicate positive market conditions, the index reading for buyer traffic is typically lower than 50.
Lower Mortgage Rates Compel Home Buyers to Act
Falling mortgage rates contributed to the uptick in home builder confidence, but affordability continued to impact first-time and moderate-income home buyers. Robert Dietz, NAHB chief economist, said: “Builders need to continue to manage rising construction costs to keep home prices affordable, particularly for young buyers at the entry level of the market.”
Analysts suggested that builders could consider offering deeper discounts and incentives to buyers to increase sales of new homes. Homes not sold during November and December added to current inventories of new homes available, which provides home buyers with more choices and less competition for homes.
Home Builders Expect More Buyer Traffic
Lennar Corporation, a major home builder said that increased buyer traffic indicated that 2019 home sales would increase and that improving economic conditions were expected to improve housing market conditions and home sales in 2019.
Builders expect to face continued headwinds in 2019; affordability tops the list, but relatively low inventories of homes in some areas dampen buyer enthusiasm. Single-family housing starts are also expected to be lower than the long-term yearly average. As economic conditions improve for would-be home buyers, a slim supply of homes and high home prices present obstacles to buyers.
Your trusted real estate agent is one of your best partners in your next home buying or selling transaction. Be sure to contact them to discuss market conditions in your area.
When you make an offer on a home, you wait anxiously to see if it will be accepted. Sometimes you’re lucky enough to hear back within hours. Other times you could wait days or even weeks.
But once you get that good news that your offer has been accepted, what happens next? It’s a common question, and one that your real estate agent can help you with. In general though, here’s what you can expect.
There’s A Home Inspection
A home inspection needs to be conducted in order to assess the condition of the home for financing needs. This is a stage where some issues might come up that require negotiation. If serious problems are reported on the home inspection report, you could try to negotiate a lower price with the seller, but they don’t have to agree to that.
There’s A Lender Home Appraisal
A lender appraisal will also have to be done. This is when the lender asks a third party to come out and assess the financial value of the home. If the appraisal comes out well, you could get approved for the selling price. But if the appraisal comes out lower than the selling price, you could have a hard time getting a mortgage unless the seller is willing to come down in price.
You’ll Go To The Closing
Now’s the time to get your financing finished up. If you’ve been pre-approved, that’s great. But your pre-approval may only be conditional. That is, it may be contingent on your financial situation to be completely in order. The full approval process may unveil something that needs to be corrected before you actually get final documents for the home purchase.
Once the documents are issued, you will go to the loan closing to sign the documents. This usually happens with a third party closing agent or escrow company that ensure everything is in order.
The final word is that a lot can happen between having your offer accepted and actually getting the keys to your new home. That’s why it’s absolutely essential to work with a trusted home mortgage professional and a licensed real estate agent when buying a new home. They’ll be able to navigate you through any of the rough spots that happen along the way. And while there are things that can go wrong along the way, chances are great that eventually you’ll be able to happily call yourself a homeowner!