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- What is
a title?
- A title is the
foundation of property ownership. It is the owner's right to possess,
use and transfer property rights.
- Why is transferring
title to real estate different from transferring title to personal
property, such as a car?
- Real estate
is permanent and can have many owners over the years, as well as rights
to use the property. In order to transfer clear title to real property,
it is first necessary to determine the rights outstanding on the property.
- What is
a title search?
- A title search
is a detailed examination of the historical records concerning a property.
These records include deeds, mortgages, court records, property and
name indexes, taxes and many other documents. The purpose of the search
is to verify the property owner's right to sell or finance the property
and to discover any claims or defects to the property.
- What kind
of problems can a title search reveal?
- A title search
can reveal several types of defects in title, liens, encumbrances
and restrictions. Among these are unpaid taxes, easements, unsatisfied
mortgages, judgments against the property owner and restrictions of
use or transfer.
- What is
title insurance?
- Title insurance
is a policy of protection against loss if any of the problems listed
above result in a claim against your ownership.
- How does
title insurance protect my investment if a claim should arise?
- If a claim is
made against your property, title insurance, in accordance with the
policy, will assure your legal defense, including paying court costs
and related fees. If the claim proves valid, you will be reimbursed
for your actual loss up to the face amount of the policy.
- What are
the different types of title policies?
- There are two
types of title policies- a lender's policy and an owner's policy.
The lender's policy protect the lender's interest in the property
as security for the outstanding balance under the buyer's mortgage.
The owner's policy protects the buyer's investment in the property
up to the face amount of the policy.
- What is
a HUD Settlement Statement (HUD-1)?
- This is a summary
of the financial portion of the real estate transaction. The HUD will
list the purchase price, loan amount, closing costs for both buyer
and seller and show all pro-rations and sums to be disbursed by the
title company to all parties.
- What is
pro-ration of property taxes?
- This is the
process of charging either the buyer or seller for their share of
real estate taxes owed on the property for their respective time of
ownership. Taxes are said to be "pro-rated" back or forward to the
due date of the property taxes.
- What is
prepaid interest?
- This is interest
due from the date of a loan closing to the first day of the following
month. Most loans require payments to be due on the first day of the
month. Each monthly payment reflects the principle and interest due
on the loan for the previous month. A loan closing on the 20th day
of the month will require interest adjustment through the 1st day
of the following month. The first payment will then be due on the
1st day of the month following. Interest adjustment is considered
a settlement charge and will be disclosed on the HUD.
- How are property
taxes prorated?
- City and County
property taxes cannot be paid until the day they are due. Because
of this factor, we charge the Seller up through the
date of closing, and the Buyer for the time after that; each their
portion of the calendar year. Sevier County's due date is October
the first.
- What kind
of money do I need to bring to closing?
- Bring a cashier's
check or certified funds. Call us the day before your closing to find
out exactly how much to bring.
- Why does
lender care so much about the taxes and homeowner's insurance?
- They are protecting
their investment in your property. Unpaid taxes can cause a lien by
the government, and unpaid insurance premiums can cause them a loss
if the property is destroyed. By collecting these amounts from you
and paying them, they are assured that two of their largest liabilities
are removed.
- Why do the
tax and insurance escrows seem so much?
- The lender usually
requires the closing agent to collect two months taxes and insurance
in advance. This means that your escrow account should always be "padded"
with enough money to make the tax and insurance payments, even if
there is an increase. Once a year, you should receive a statement
from your lender regarding your escrowed monies. If the balance has
fallen below the amount needed to make these two payments, you will
probably have to make an additional payment to bring the balance up
to par.
Glossary
of terms used in real estate transactions
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