Michael Creed's Blog

With the spring selling season almost upon us, I thought I would throw out a quick tip for those of you that are looking to sell your home this year. 

Like most homeowners, you’ve probably stayed on top of major repairs and maintenance, making sure that your house is painted regularly, that your furnace is running efficiently, and that your roof isn’t leaking.  It’s those minor tasks that seem to get neglected for months on end – that leaky bathroom faucet, that broken doorbell, that torn window screen in the bedroom.

All those tiny little flaws in your otherwise beautifully maintained home will add up to “owner neglect” to the observant buyer.  If you want to sell your home quickly and for a good price, all signs of owner neglect must be eliminated.

Take a pad and paper and a pencil and launch an immediate, super-critical tour of your home, inside and out.  Note all offenders such as loose doorknobs, cracked windowpanes, peeling paint, rusting gutters, etc.  Don’t count on buyers to overlook these seemingly minor imperfections.  It’s annoying little flaws like these that keep your home from showing its best and often add up to a no-sale for you and your family.  Get to a hardware store and make those minor repairs!!

I hope that you have a great day!  Feel free to post your comments below.

What is Title Insurance and do I need it?

This one is complicated and the ride is fairly long; hold on and here we go…

Title insurance is not as well understood as other types of insurance, but it surely is just as important. See, when purchasing a home (or any other real estate), instead of purchasing the building or the land, you are technically purchasing the title to the property – in other words, the right to occupy and use that space. That title could be limited by rights and claims asserted by others, which may limit your use and enjoyment of the property and even bring on financial loss. Title insurance protects against these types of title hazards.

Other types of insurance that protect your home typically focus on the possibility of future events and charge an annual premium for such a protection. Conversely, title insurance protects against loss from hazards and defects that have happened in the past and is purchased with a one-time premium.

Two Kinds of Title Insurance That Can Benefit You in Two Ways

1. Owner’s Title Insurance
2. Lender’s (or Mortgagee) Title Insurance

Owner’s Title Insurance is typically a one-time-premium which is paid – usually at the time of the purchase of your home – to insure the legal owner of the insured real estate against defects in the title to their property.  These defects can be defects that are known or not known at the time the owner acquires the property. This coverage protects the owner of the property and lasts as long as you, the policy holder – or your heirs – have an interest in the insured property.  This may even be after you have sold the property.

Most lenders, First Omni included, require mortgagee title insurance as a security for their investment in real estate; just as they may call for fire and other types of insurance as protection against their interest in the investment.

In many states, if you purchase an owner’s policy simultaneously with a lender’s policy, you will get a discounted rate.

What’s the Difference Between Owner’s Title Insurance and Lender’s Title Insurance?

Lender’s insurance coverage insures the lender. Owner’s insurance coverage insures you, the owner.

For example: Let’s say you buy a house for $200,000 and have a mortgage for $160,000. Further, you decide not to buy the owner’s policy and a claim later is made against the property by, say, an heir of a former owner of the property who thinks they still have legal rights to the property, and you are named in the lawsuit. 

Right off the bat, you would have to cover your own attorney fees to protect your interests in the property.  If you had an owner’s policy, the title insurance company would cover your attorney fees by using their expert defense attorneys. 

Next, in the event that you were to lose ownership or title to the property and must vacate the premises, not only would you lose your $40,000 in equity, but because the bank had a $160,000 lender’s policy, the title company would pay off the mortgage and then come to you (probably via an attorney) to ask you for the $160,000 that they just paid your bank because you didn’t have an owner’s policy. 

Whereas, if you had an owner’s policy, they would have paid off the mortgage and write you a check for your equity – up to the original purchase price.   

What Does Your Premium Really Pay For?

Title insuring begins with a search of public records affecting the real estate in question. An examination is conducted by the title agent, or an attorney on behalf of the underwriter, to determine whether the property is insurable. The examination of evidence from a search is intended to fully report all “material objections” to the title. Frequently, documents that don’t clearly transfer title are found in the title chain (history) that is assembled from the records in the search. Here are some examples of documents that can present concerns:

-          Deeds, wills and trusts that contain improper wording or incorrect names;

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

-          Easements that allow construction of a road or utility line;

-          Pending legal action against the property that could affect a purchaser; or

-          Incorrect notary acknowledgements.

Through the search and the examination, title problems are disclosed so they can be corrected whenever possible.  However, even the most careful preventative work cannot locate all hidden title hazards.

Your Last Defense against Hidden Title Hazards

In spite of all the expertise and dedication that go into a title search and examination, hidden hazards can emerge after closing, resulting in unpleasant and costly surprises.  Some examples of hazards included:

-          A forged signature on the deed, which would mean no transfer or ownership to the person who thinks they currently own the property;

-          An unknown heir of a previous owner who is claiming ownership of the property (as used in my example above);

-          Instruments executed under an expired or fabricated power of attorney; or

-          Mistakes in the public records.

Title insurance offers financial protection against these and other covered title hazards. The title insurer will pay for defending against an attack on title as insured, and will either perfect the title or pay valid claims; all for a one time charge at closing.  Before you go to closing, be sure to ask about your title protection so as to be certain that you are fully protected.

Please email me or call 800-627-1925 x1923 if you have any questions any of this.

NOTE: This is not to be construed as legal advice as I am not an attorney of law in any state; this is simply fact as I understand it and I would urge you to consult an attorney practicing Real Estate Law in your state.  A special thanks to an article written in 2004 by a local Louisville, KY real estate attorney, Marc A. Yussman of Goldberg & Simpson PSC as his insights had a lot to do with the content of this blog posting.

Being that I have spent a lot of time creating and launching a long-anticipated FAQ page for my website (the site you are looking at right now), I have not had time to conjure up an interesting article for you to read this week. 

Beyond that, I need to leave the office as soon as I can to get my daughter from the 'sitter's house because we are getting nasty ice storms - the roads are already horrible - and I will have a short day tomorrow because I will be leaving early for a minor surgical procedure.

I did, however, read an article about Telling the Truth by an author that read regularly. His name is Jeffrey Gitomer and the specific article I am referring to is located right here.

Next week will be back to normal!  Thanks for reading!

My Story-

As you may know, I am computer geek at heart but I didn’t realize it until I had already finished up my degrees in Finance and International Business and started working in the Mortgage Business.  So, now, I use my hobby to help me build things like the website you are currently visiting and my personal website for my family (which is very new). 

My most recent computer project involved tweaking the home page of MichaelCreedMortgages.com to make it less wordy.  As you may recall, it was über-wordy. To fix this, I wanted to take the headings and make the page load in a collapsed form so that readers would only have to read items that they wanted to.  If you go to the site, you will see that my work, which started last night and ended this morning, was successful; I managed to figure out the Java-scripting (with only about three minutes of help from a very good friend of mine who is a Senior Programmer for Pronto Progress in Milwaukee, WI) to make it work the way I wanted.  Check it out when you get a chance by clicking on one of the headings in the main body of the page.

Anyway, whenever I accomplish something like this, I find myself questioning why I am doing mortgages for a living and not learning how to do websites and such. That got me thinking, “What would happen if I changed jobs?”  Don’t worry, I have no plans to change careers because I also really enjoy helping good people get good mortgages – all I did with that thought-provoking question was create this blog post about what happens when you change careers and then have a need to get a mortgage? 

My Point-

I wrote about this topic in two other posts on this site but they were much more detailed than I will get into here.  The first post talked about those that receive income that falls into the categories of Salary, Hourly, Bonus, & Overtime.  The second post discussed those that have income that falls into the categories of Commission, Self-Employment & Part-Time.

Here’s the summary version:

-          If you change careers (not jobs, but careers) and your new career comes packed with a salary, you should have no troubles getting a mortgage as long as you and I are able to show that there was a logical progression from one line of work to the other.  For instance, let’s say you were an educated Operations Manager at ABC Food Processing Company while you took night classes to earn your MBA.  After completion of the MBA, you landed the opportunity of a lifetime to be Executive Director of Sales for XYZ Financial Services Company.  That’s a career change for sure! And it is a logical change because you finished school for that type of work and – most likely – increased your income level too.  If your change is the other way around, you may have issues.

-          If your career change goes from a salaried or hourly position to a position of self-employment, be prepared to stay in business for two years before obtaining a new mortgage because you will have to prove that you can sustain your business for two years before you will get approved for a home loan.

-          If you move from a position in the first- or second-post categories to a position that fits in the first-post categories, you should be able to qualify for a mortgage without trouble.  If you move to the second-post categories, particularly from the first-post categories, you will need to show that you can sustain yourself before you can get approved for a home loan.

-          If you are already a second-post income earner, and you want to change to another second-post type of income, you will still need to wait two years from the change in careers to prove that you are able to sustain yourself in your new line of work.

Not sure where you fall?  Email me (or call 800-627-1925 x1923) and we can talk.