How Escrow Helps Home Buyers—And When It Hurts
Through an escrow arrangement, a neutral go-between holds
onto documents or collateral while a transaction is underway. Escrow providers
usually charge the parties a fee to accept and hold the assets, redistribute the
funds pursuant to the parties’ agreement, and ultimately close the escrow
When you’re buying a home, there are two main types of escrow
accounts to expect:
- An escrow account for the home purchase. The escrow arrangement
sees to it that everyone performs as promised in the purchase agreement, and that
each side’s value is protected until the parties come through on their
commitments to each other.
- An escrow account for your mortgage company.
This is the common way of distributing a home buyer’s payments for homeowner’s insurance
and taxes. The lender can be sure, this way, that timely payments keep your
house insured, and the title clear of tax debt.
Here, we look at both kinds of escrow — the account used until
you close on your home, and the account used after closing, complementing your
monthly mortgage payments with insurance and tax payments.
We’ll also review the case against the second kind of
Continue reading “All About Escrow”
The American Rescue Plan, accompanied by $1.9 trillion in stimulus funding, includes $10 billion in mortgage payment relief for homeowners affected by the massive workforce disruptions of 2020. Still more funding is marked to help homeowners get back on track with their insurance, utility bills and property taxes, and to assist USDA mortgage holders in need.
With more than two million homeowners “seriously delinquent” on their mortgage payments, according to Black Knight, more than 600,000 forbearance plans are at the verge of expiring. Loan servicers, directed to offer 180 days of forbearance by the CARES Act of 2020, have extended forbearance in 90-day chunks. Households may now either receive forbearance extensions until June, or begin paying back the accumulated debt. Mortgage servicers are deciding whether to allow extensions based on new federal permissions for up to 18 months of forbearance for early adopters of the option.
Continue reading “What’s the Latest on Covid Mortgage Relief?”
Are you considering using a quitclaim deed? It’s a
fast, simple, and reasonable way to transfer home ownership. It’s a good choice
in certain situations. What are those certain situations?
In contrast to warranty deeds, which are most often used in
regular home sales, a quitclaim would more likely be used:
family members. In this case, when the parties know the history of the
property and no title insurance policy is issued, quitclaiming can be done either
with or without expert help.
a divorce. A decree stating that one ex-spouse will keep the home doesn’t
actually transfer a home. Yet transferring ownership to an ex is easily done by
clear up confusion about ownership, including name changes. Quitclaiming to
clarify ownership can be achieved without expert help, but it’s often requested
by a title insurer.
a sale of a bank-owned house. If it will be the buyer’s responsibility to
make the title good, a quitclaim can be used in an REO auction.
place a home into an LLC. Some investor owners decide to transfer
properties into an LLC. A quitclaim deed is one way to do this.
Quitclaiming is a simple, because it can transfer ownership
of real estate without the need to examine current ownership or the chain of
title. Historically, the quitclaim has long been the go-to method of
transferring property while avoiding bureaucracy.
In that spirit, without further ado, here’s more on five top
reasons homeowners decide to use quitclaim deeds.
Continue reading “Using a Quitclaim Deed: Top 5 Reasons”
Imagine the shock of reading your deed carefully and finding this rule: “This property shall not be resold, leased, rented or occupied except to or by persons of the Aryan race.” The Seattle-based Windermere Real Estate company doesn’t want to put up with such findings any more. This year, it’s working with its clients to use Washington state law to delete offensive deed language.
Under Washington law, an owner or resident of a property
with an invidious deed restriction may have it stricken from the public
records. This recent addition to the law makes it easier for Washingtonians who
hit walls trying to remove discriminatory language from the title of their
In related news, Notarize, an online notary startup, now offers free notarizations to remove offensive covenants. Notarize calls it a matter of digital inclusion. The company’s website supplies assistance for Washingtonians, and will be expanding the service to Arizona, California, Colorado, Nevada, Idaho, and Oregon. In many other states, though, there is neither a process for removal not any pending legislation to deal with the matter.
Continue reading “Race Restrictions Still Appear on Deeds. There’s a Movement Afoot to Delete Them.”
A Key Planning Tool for a Homeowner’s Future
With a power of attorney (POA), you can appoint a trusted,
competent person to act for you later, if you can’t carry out real estate
transactions on your own behalf. In POA lingo, you are the principal,
and your trusted person becomes the agent or attorney-in-fact
(not to be confused with a real estate agent or an actual attorney!).
Continue reading “Creating a Power of Attorney”
What’s the real estate legal description that goes on a deed?
A real estate legal description for a deed is not made up of the glowing
words in a real estate marketer’s flyer — as grand as that would be! It is not
simply a street address, or a tax description copied from the home county’s
website. None of these make a deed legally able to transfer a piece of real
estate from one person to another.
A legal description is a precise, legally meaningful and
binding summary of a property survey. You can find it on the existing deed —
that is, the last deed used to transfer the property.
The legal description may have a border around it, or it might be
indented to make it easy to spot. Sometimes it appears on an attached exhibit,
incorporated by reference on the face of the deed. The description on a
mortgage agreement or title insurance commitment should match the legal
description on the deed.
Whenever an interest in property is transferred from one
party to another, the real estate legal description is representing the
property exactly. It is proof to lenders that the property is just as it’s shown
on the deed, to be valued accordingly. And it allows a future surveyor to
precisely trace a property’s angles, corners and borderlines.
It’s a hard rule that deeds have to include the property’s
complete legal description. Each county has specific requirements for how that
description is made, but the point is to submit the right description for the
deed being prepared. That might be all you really want to know!
But if you are curious about the main types of legal
descriptions, and the components that form them, read on.
Continue reading “Real Estate Legal Descriptions for Deeds”
To age in place is an increasing popular goal. Homeowners across
the country are renovating their homes to enhance accessibility and lengthen
their independent, productive lives. Of course, there’s a lot more to their goal-setting
than preparing to install ramps and handles. Owners are putting sound financial
planning into the mix.
In this article, we lay out some thoughts on promoting well-being
and home accessibility. We’ll add tips on preserving value along the way.
Continue reading “Healthy, Wealthy and Wise: Age at Home, Your Way”
Homes are among the priciest items most of us ever buy. A
significant slice of the purchase goes into paying the real estate
professionals. Clients should know what they’re paying.
Listing agents throughout the United States charge sellers 5-6%
of the home’s sale price. In cold, hard, dollar terms: a commission of 5% on a
$200,000 house is $10,000. Even after seller concessions, that original figure
is in your agreement and it is binding.
Buyers and sellers alike should know how the fees are
structured, and that these fees are negotiable in the initial agreement stage. While
many buyers assume the seller covers agents’ fees, at the end of the day, the
buyer pays for the asset. In effect, the buyer pays all fees, as the seller
prices these costs into the home sale.
Continue reading “How Much Will You Pay Your Real Estate Agent?”
Owners of U.S. investment or business properties should know
about a key tax-deferral provision allowed by the Internal Revenue Service: the
1031 exchange. Also called a like-kind exchange, it’s a way of swapping
one investment property for another.
Upgrading to a more valuable investment property would
usually involve a taxable sale. But by carrying out a like-kind exchange under Section
1031 of the Internal Revenue Code, the property owner defers capital gains taxes.
This leaves more value for the investor to put into a replacement property.
Continue reading “For Property Investors: Six Steps to a 1031 Exchange”
A recast mortgage could be an option for homeowners who need
to tweak their mortgage payments. Most big banks allow at least one recast for a
client with a conventional (Fannie Mae or Freddie Mac) mortgage loan.
To recast the loan, the owner makes a lump-sum payment to
the loan principal. The minimum amount that has to be made is the lender’s call.
The lender then issues a new amortization schedule, now with lower payments. Reducing
the debt left on the loan principal means there is now less interest to pay.
In short, the main idea with a loan recast is keeping the
same loan terms — especially important to people whose loans already have low
interest rates, and those who wish to avoid resetting the term of years — but lightening
the monthly payment due from here on. A recast can be an appealing prospect for
a homeowner who’d like to lower the principal in one fell swoop, leaving the
length of the loan as it is, only with lower future payments.
Continue reading “Fine-Tuning Your Mortgage: Can a Recast Loan Make Sense?”