At Cobalt, we have handled thousands of real estate closings. Over our years in business, we have encountered a wide range of questions, but certain questions come up more often than others. Here are the top 5 for Buyers and Sellers
- What is title insurance?
Title insurance protects the parties to a transaction from potential defects to title that can’t be discovered in the ordinary title search process. Issues like fraud, unrecorded claims and easements. Title insurance covers the cost of the house if lost, legal fees and costs to fix legitimate claims.
- What is the difference between basic and enhanced title insurance?
For a homeowner, there are two types of title insurance. The basic insurance covers issues like fraud, unknown heirs and recording errors. Enhanced insurance covers everything included in basic as well as a range of encroachments, easements, CC&Rs, zoning and other less common, but equally impactful problems that can arise with ownership.
- Do I need title insurance if my lender has it?
A mortgage lender will always insist on title insurance as a condition of making the loan to buy a house. Buyers notice this requirement and question whether they need to have their own coverage. Title insurance to the benefit of the lender will only pay if the lender suffers harm such as an inability to foreclose on the property because of cloud on the title. On the other hand, homeowner title insurance covers the homeowner from the time the claim is made, immediately protecting the homeowner from the problem.
- Why Does My Lender Require Title insurance
Lenders are risk averse. They are putting a significant amount of money on the line in issuing a mortgage, and they do not want to jeopardize that investment. While lenders don’t insist on title insurance covering the homeowner, they are unwilling to take a gamble on their own money, and title insurance provides an important layer of protection.
- Do I need a Survey?
If you are buying property that is anything other than a condominium, it’s a good idea to get a survey. A surveyor will compare the description of the property on record with the county recorded with the actual property. This assures buyers that they are getting the property that they are paying for. A survey can reveal critical issues like mistaken property lines, particularly if the home is built on or close to the property line. It can also reveal whether the yard is the actual size or an “optimistic” fence. At a cost of $350-400, it is an excellent investment in peace of mind.
- When do I get my money?
In Virginia, when the deed is recorded, the funds are disbursed. In DC, typically the funds are disbursed on the day of closing.
- How does my mortgage get paid?
The title/settlement company will take the money paid by the buyer and pay all parties who need to be paid, including the seller’s lender.
- How do I get my money?
Funds can be disbursed by wire or check. A wire transfer may include a transfer fee. A check deposited into a bank account will be subject to a hold before the funds become available.
- What happens to my escrow account with my current lender?
Some mortgage companies collect money towards real estate taxes, which are held in an escrow account until payment is due. Upon payoff of the mortgage, the mortgage company will close out the escrow account and refund any funds in the account. Usually the mortgage company will send a check within a month of closing.
- When can I cancel my homeowner’s insurance?
When the money appears in your bank account, you are safe to cancel your homeowner’s insurance. At that point, you will receive a prorated refund of the insurance premium.
Are you a buyer or a seller or a real estate agent with additional questions about settlement? Contact Cobalt Settlements.