FAQ

What is title insurance?
It is an insurance policy that protects the insured against loss should the condition of title to the land be other than as insured. Unlike other types of insurance that offer protection against future possible occurrences, title insurance offers protection against past occurrences which could result in a claim at a future date. Coverage continues in effect for so long as you have an interest in the covered property. If you should die, the coverage automatically continues for the benefit of your heirs. If you sell your property, giving warranties of title to your buyer, your coverage continues. Likewise, if a buyer gives you a mortgage to finance a purchase of covered property from you, your coverage continues to protect your security interest in the property. Title insurance provides the insured with "peace of mind" in knowing that you are receiving good and marketable title to the real estate you are purchasing.
Why do I need title insurance?
When you buy a home--or any property for that matter--you expect to enjoy certain benefits from ownership...to be able to occupy and use the property as you wish, to be free from debts or obligations not created or agreed to by you, and to be able to freely sell or pledge your property as security for a loan. Title insurance is designed to cover these rights. Without an owner's title insurance policy, you may not be fully protected against errors in the public records, hidden defects not disclosed by the public records, or mistakes made during the examination of the title of your new property. As a result, you may be held fully accountable for any liens, judgments or claims brought against your new property. However, your owner's title policy insures that if such an occasion arises, you will be defended, free of charge against all covered claims and paid up to the amount of the policy to settle valid claims.
What is a title search?
A title search is a thorough review or examination of the public records that pertain to real property ownership and the rights/limitations of its use. The search period begins with the current owner(s) and extends back in time for a period of 60 years (commonly referred to as the "chain of title"). All documents affecting the subject property are reviewed for accuracy, completeness and proper execution. Similarly, all owners of record during the search period are indexed to determine their ownership interests, marital status and legal and mental capacity to enter into a contract to sell/buy real property. All conveyances must have been properly conducted and approved by the appropriate governmental departments.
What issues can a title search reveal?
A title search can show any number of title defects, liens, and other encumbrances and restrictions. Among these are unpaid taxes, unsatisfied mortgages, judgments against buyers/sellers and any restrictions or conditions limiting the use of the land.
Are there any issues a title search may not reveal?
Yes. There are some "hidden hazards" that even the most diligent title search may not reveal. For instance, a previous owner could have incorrectly stated his marital status resulting in a possible claim by his legal spouse. Other hidden hazards include fraud, forgery, defective deeds, mental incompetence, confusion due to similar or identical names, and clerical errors in the City/County land records. These defects can arise after you've purchased your home and can jeopardize your right to ownership in part or full.
What is a HUD-1 Settlement Statement?
This is a summary of the financial portion of the real estate transaction. The title company or closing agent is required by the Department of Housing & Urban Development to use the HUD-1 on virtually all one-family to four-family residential real estate transactions involving a lender. The statement will list the purchase price, loan amount, closing costs for the buyer and seller, and will show all sums being charged and disbursed to the parties involved. It also clearly summarizes the total amount due from the purchaser.
What does title insurance cost?
The cost varies, depending mainly on the value of your property. The important thing to remember is that you only pay once, then the coverage continues in effect for so long as you have an interest in covered property. If you should die, the coverage automatically continues for the benefit of your heirs. If you sell your property, giving warranties of title to your buyer, your coverage continues. Likewise, if a buyer gives you a mortgage to finance a purchase of covered property from you, your coverage continues to protect your security interest in the property.
If I have a problem, will I lose my property to make a claim?
Not at all. At the mere hint of a claim adverse to your title, you should contact your title insurer or the agent who issued your policy. Title insurance includes coverage for legal expenses that may be necessary to investigate, litigate, or settle an adverse claim.
If my lender obtains title insurance, why do I need it?
The lender's policy covers only the amount of its loan, which is usually not the full property value. In the event of an adverse claim, the lender would ordinarily not be concerned unless its loan became non-performing and the claim threatened the lender's ability to foreclose and recover its principal and interest. And in the event of a claim, there is no provision for payment of legal expenses for an uninsured party. When a loan policy is being issued, the small additional expense of an owner's policy is a bargain.
What types of risks are covered by title insurance?
Standard Coverage addresses such risks as: forgery and impersonation; lack of competency, capacity, or legal authority of a party; deed not joined in by a necessary party (co-owner, heir, spouse, corporate officer, or business partner); undisclosed (but recorded) prior mortgage or lien; undisclosed (but recorded) easement or use restriction; erroneous or inadequate legal descriptions; lack of a right of access; and deed not properly recorded.

First American's Eagle Policy covers all of the above risks plus: off-record matters, such as claims for adverse possession or prescriptive easement; deed to land with buildings encroaching on land of another incorrect survey; silent (off-record) liens, such as mechanic's or estate tax liens; pre-existing violations of subdivision laws, zoning ordinances or CC&R's (Covenants, Conditions & Restrictions); post-policy forgery; forced removal of improvements due to lack of building permit (subject to deductible); post-policy construction of improvements by a neighbor onto insured land; and location and dimensions of insured land (survey not required).

Refinancing FAQs

Should I refinance?
When interest rates fall, a homeowner should certainly explore the possible benefits of refinancing; however, you should discuss your financial situation and goals with your lender before making a final decision. Are you looking to lower your monthly payment? Consolidate debts? Get cash out for a large purchase? Change your interest deduction expense for your taxes? Ask your lender to provide you with a few refinancing scenarios that outline how your loan's term, monthly payment, and total interest expense will change. After reviewing these scenarios, you'll have a more clear picture as to whether or not the cost to refinance is worth it for you.
Is there a best time to refinance?
The old rule of thumb is that a person should refinance when mortgage rates drop 2% or more below their current interest rate. However, refinancing may be a viable option even if the difference is less. A modest reduction in the loan rate can still trim your monthly payment. For example, the monthly payment on a $100,000 loan at 8.5% is about $770 (excluding taxes and insurance). If the rate were lowered to 7.5%, the monthly payment would be about $700, or a savings of $70. Again, the significance of such savings is dependent upon your overall financial picture, how long you plan to stay in the home, etc.
Should I refinance if I plan to move soon?
This is an important factor to consider. Most lenders charge fees to refinance a loan. If you plan to stay in your home for less than a few years, there may not be enough time for your monthly savings to outweigh your up front costs. For example, let's say your refinance transaction lowered your monthly payment by $50 and the lender charged you $1,000. It will take 20 months ($1,000 divided by $50) for you to recoup the up front cost before you will begin realizing your savings. Some lenders offer "no cost" loans which come with a slightly higher interest rate but no other costs. The attractiveness of these loans depends on the interest rate you are being charged on your current loan.
Is there anything I should consider before refinancing?
One factor people don't always consider is that saving mortgage interest dollars might not always be the best choice for everyone. You have to take a good look at your own "financial personality" here. Remember that mortgage interest is tax deductible. When you reduce your monthly payment, you reduce your tax deduction as well. Are you disciplined enough to invest your newfound monthly savings in such a way that your lessened tax benefit won't be a problem?
What types of fees should I expect to pay?
This depends but, in general, costs might include a lender application fee, an origination fee (typically 1% of the loan amount), administrative fees, title insurance company costs (settlement fee, title search, title insurance premium, handling/service fees, recording fees paid to the Clerk of the Court). Your new lender will disclose their fees to you on a Good Faith Estimate, which is usually done at the time of application or soon after. The sum of all charges could amount to 2-3% of the loan amount. If you don't have the available cash to cover the associated loan costs, you might want to look for lenders offering "no-cost" loans. There will be a slightly higher interest rate associated with such a loan, so discuss the pros and cons with your lender. In addition, if you have a prior First American Owner's Policy which is less than ten (10) years old, you qualify for a discount on the title insurance. You will need to provide us with a copy of the policy.
What are points?
Points are costs that need to be paid to a lender in order to receive mortgage financing under specified terms. One point is equal to one percent of the loan amount. In other words, one point on a $100,000 loan would be $1,000. Discount points are fees that are used to lower the interest rate on a mortgage loan. Some people may choose to pay one or more points to the lender up front in exchange for a lower interest rate. The choice is personal and dependent upon one's financial situation, how long one plans to be in the home, etc.
When should I contact the title company?
Contact them as soon as you are reasonably sure of loan approval and agreement of terms with your lender. You should inform your lender at the time of application (or shortly thereafter) who you have chosen to conduct your closing. You may be required to place a non-refundable deposit with the title company to cover expenses, which will be applied to costs at the time of closing. It is advisable to contact the title company at least two weeks prior to closing.
What will the title company need?
Information about your property (address, etc.) Name, phone number, account number for each open mortgage Social Security Numbers for all owners Name and phone number for new lender Copy of prior Owner's Policy if less than ten (10) years old
Why do I need another title search?
Each lender requires that a Commitment to Insure be issued in their favor prior to closing. The information in that Commitment can only be obtained from a review and evaluation of documents in the local land records. Therefore, the title company must research these records for each transaction. This gives them and the lender a proper picture of all existing liens and encumbrances as well as accurate ownership and real estate tax and assessment information.
If I have title insurance, why do I need to buy again?
When you purchased your home, you probably paid for Owner's and Lender's Title Insurance Policies. Your Owner's Policy will remain in force and effect; however, when the existing loan is paid off at the time of refinancing, a new Lender's Policy must be issued.
What will happen at the closing?
Normally, you will come to the title company's office to sign all of the new loan papers. You will have to show proper identification since many of these are legal documents which require a Notary Public's acknowledgment. The lender will have prepared and delivered to the title company all of the paperwork pertaining to your new loan. You will sign many of the same documents and forms that you signed when you originally purchased your home.