Are you in the process of buying or selling a home? If so, there will likely be multiple people you'll be dealing. One of those particular people is known as a title officer. Title officers are usually employed by real estate firms or title insurance companies, while some also may work as freelancers. Most title officers have picked an area of expertise to focus on such as commercial, industrial or residential property titles but some may even choose to be proficient in all three. Not sure what a title officer actually does? Here's a little information about title officers in order to give you a better idea of the role they play during real estate transactions.

Simply put, a title officer is one who investigates property titles prior to a real estate purchase or sale. Besides researching the title, the title officer may also research land maps and past mortgages to get an insight into any previous issues with the property. This kind of research is done in order to determine if there are any irregularities on the title which will interfere with the transaction or with the use of the property. Some irregularities that can affect the transaction or the title company's ability to insure the title are liens, outstanding taxes, easements and zoning restrictions. If a title problem is discovered, the title officer will more than likely first contact the seller to validate the issue. If in fact the issue is legitimate such as unpaid taxes or a lien, the seller and the title officer will work together to resolve the issue before the sale of the property can proceed. The buyer will also be notified of any discrepancies that could delay or possibly cancel the sale all together. If the buyer feels that the investment is worth it, he or she may even agree to take on the responsibility of resolving the issue or issues him or herself.

On the other hand, easements and zoning restrictions are handled a little differently. If the title officer uncovers an easement or restriction that will affect title insurance coverage or the sale of the property, he or she will take the case to the governing boards. The officer will present his or her case to the board members in order to persuade them to eliminate or change these restrictions. If the request is turned down, the title officer will then work with the buyer and seller to reach an amicable agreement.

A title officer may work by him or herself, while others may rely on the help of staff members such as a title searcher or a title abstractor. A title searcher is one who usually locates the necessary documents for the title officer and the title abstractor is one who pulls information from trust deeds and mortgages. The majority of title officers actually begin their careers as underwriters, title searchers or title abstractors and as you can see, they play a major role in the buying and selling of real estate.

It's not uncommon at all for one or even all parties involved in the buying and selling of property to be represented by an agency. Put simply, an agency relationship is one that consists of one person representing the interests of another person. Licensed real estate agents are granted legal permission by the state to represent an individual in the sale, purchase or lease of a particular piece of property. All agents are required to adhere to the local laws in regards to agencies as well the regulations included in the official Realtor's Code of Ethics, which every agent must agree to before attaining a license. The relationship established between a person and the agent is formally known as a fiduciary relationship. This means that it is a relationship built on trusting the agent. There are quite a few duties that are the responsibility of the agent including loyalty, diligence, disclosure, confidentiality and accountability, in addition to reasonable skill and care. Generally, there are five different kinds of agencies used in terms of real estate transactions. To help you get a better idea of what each one involves, here's a brief overview of the five different types of agencies most commonly used when buying and selling property.

Buyer Agency

This type of agency relationship is formed whenever a buyer's agent is the one representing their own interests in a real estate transaction. A few responsibilities of the buyer's agent include scouting properties that meet the buyer's needs and then setting up appointments to show a selected few to them. It's also the responsibility of the agent to research the property and provide the buyers with information such as zoning, schools in the area, taxes and utilities. They also are usually the ones to prepare a competitive market analysis on the property and gather a few details of other properties recently sold in the community in order to facilitate helpful information for the buyer to review. After reviewing this information and going over it with the buyer, the agent then advises what price they should initially offer the seller. The agent will also assist the buyer in writing an offer while keeping their best interests in mind. If any negotiating needs to take place, the agent will handle this on behalf of the buyer. Once a deal has been reached, the agent will also assist the buyer during the loan application process and attend the closing in order to answer any questions. Not to mention, he or she will also keep track of important dates, appointments and documents so the buyer doesn't have to.

Seller Agency

Another type of real estate agency is called a seller agency. This kind of agency takes place when an agent represents the interests of a seller during a real estate transaction. The seller's agent is responsible for preparing a competitive market analysis for the property and implementing effective marketing strategies in order to help the seller determine the best list price. He or she might also be responsible for staging and positioning the property if there's a need for it. It's also the job of the seller's agent to receive all offers on the property, present them to the buyer and then counsel on what price to accept. As with buyer's agents, the seller's agent will also negotiate pricing and terms on behalf of the seller. A few other designated duties of the seller's agent is preparing an estimate of closing costs on the property and keeping track of all important dates and information. The agent will also represent the seller's interest at showings and attend the closing of the transaction with the seller.

Dual Agency

A dual agency occurs when a buyer's agent is the one showing a piece of property that is also represented by that agent's firm. It works the other way around as well. A dual agency can also take place if the listing agency shows property that is represented by the same firm. This particular type of agency is legal in all 50 states, but in the case of most dual agency situations, both the buyer and the seller will be required to sign a consent agreement. In a dual agency, it is the agent's responsibility to treat both parties fairly and keep their information confidential at all times during a transaction.

Designated Agency

A designated agency is closely related to a dual agency. This type of agency is used to assure both the buyer and the seller that the real estate firm is working at their best interest in the instance of a dual agency. With a designated agency, the buyer and the seller are both provided with an individual representative who will handle the transaction on their behalf. Similarly to a dual agency, both parties must agree to a designated agency and sign consent forms provided by the firm.

Unrepresented Persons

If a buyer or seller hasn't yet signed a representation agreement with an agent, he or she is considered an unrepresented person. Any unrepresented persons have the responsibility to protect their own interests and the real estate agent is not allowed to provide him or her with any advice or counsel in regards to purchasing or selling property. Although some unrepresented persons may believe they'll be saving money by not signing a representative agreement with an agent, that's not true at all. An experienced real estate agent has the skills and knowledge needed to get buyers and sellers the best deal possible. If you're not familiar with the local real estate laws and statutes, it really is best to leave the process up to the professionals.

The type of agency can vary from transaction to transaction. Hopefully this overview has given you a better understanding of the different types of agencies associated with buying and selling real estate. As you can see, it's important to be represented by a qualified real estate agent if buying or selling because they have been trained to properly represent both buyers and sellers. It's recommended you get in touch with your agent today to discuss your options.

Titles are used to convey ownership of real property such as real estate or automobiles. When a piece of property is sold to a buyer, the title must then be legally transferred from one party to the other. While this title transfer process seems rather simple, it can get a little tricky at times due to all of the different documents required for special circumstances. There are quite a few different ways one person, a couple or even a group of people can all own a piece of the title. Also, in the instance of a death, a divorce or a sale, the party holding the title may differ. Here's a look at the various types of title transfer methods most commonly used in the buying and selling of real estate. Read over them to decide which method of title holding best fits your situation and specific needs.

Joint Tenancy

Joint tenancy is when two or more individuals jointly hold title to real estate with each retaining equal rights. This is only the case while both tenants are living. If one of the partners passes away, their rights and ownership of the property is then passed to the surviving tenant. The advantage of a joint tenancy is that the parties involved in the ownership of the property don't need to be legally married or even related for that matter. The downside to a joint tenancy is that all parties who share ownership of the property must approve of financing decisions or changes made to anything on the title. So, that means that each of the owners takes a huge risk in trusting the financial decision making of the other owner. This is because a creditor can force a sale of property in order to collect on a judgment owed by either of the owner's

Tenancy In Common

Tenancy in common is extremely similar to joint tenancy. The only major difference is that with a tenancy in common, each individual holds the title to each of their respective part of the property and have the ability to dispose of or sell it at their own will. Partial ownership can easily be transferred to any other party while the rightful owner is alive and in the instance of their death, ownership will then be transferred to that owner's designated heir. This type of title hold allows for an individual owner to use the wealth created by their portion of the property as collateral for financial transactions. It also allows creditors to only place liens against one owner's portion of the property, so the other owners and their portion of the property are protected. Although, any liens must be cleared before a total transfer of the property can take place.

Tenants By Entirety

This type of holding refers to real estate ownership under the assumption that the couple are considered one person for legal purposes. In the instance of a death, the title is automatically fully transferred to the other party. Keep in mind that this method of title holding is only available to owners who are legally married. The advantage of having one of these particular titles is that there is no need to take any legal action if one of the spouses passes away, which means there's also no need for a will. If the couple divorces, this type of title automatically converts to a tenancy in common. Either one of the owners then has the ability to transfer ownership of their part of the property to anyone they choose.

Sole Ownership

This type of title holding is pretty straightforward and self-explanatory. Sole ownership means that an individual or single party is the only one holding the title. This is why most sole ownership titles are held by singles or married individuals who own property separately from their spouse. Sole ownerships are also common for businesses with a corporate structure that allows them to invest in real estate. It's important to note that in the case of married couples holding property separately, most title insurance companies will require the other spouse to legally relinquish their right to ownership of the property. Sole ownership is preferred by some because it allows the easy transferred because no other party is required to approve before a transaction can take place. If the sole owner dies, it must be specified in his or her legal will who will be taking over the ownership of the property. If no will is left, many problems can arise when the courts try to determine who the rightful owner is.

Community Property

Community property is a type of title ownership that is usually reserved for married couples. Under community property, either spouse has the right to dispose of or transfer his or her half of the property. Property other than real estate which is acquired during the marriage is also considered community property. You don't necessarily have to be married to own community property as it can also apply to couples who are only common-law married. If the couple lives together as common-law spouses and the title is never changed to a sole ownership, the two of them will share ownership of the property.

Community Property With The Right of Survivorship

Although not available in the states of California, Arizona, Texas, Nevada or Wisconsin, community property with the right of survivorship is a common way for unmarried couples to hold title to property. If one of them passes away, their community property and assets are automatically passed to the other.

While every state requires the legal filing of a title when property is transferred during a sale, the laws and regulations can vary. These are just some of the most common methods for holding title to property used in the real estate industry today. There are plenty of other ways to hold title for individuals, single families, corporations, partners and trustees. If you are involved in a unique situation, you may want to contact your title company or a reputable tax professional to learn more about the title holding options which best fit your needs.

One of the first things on a new homeowner's to-do list undoubtedly should be to attain the proper coverage for their home and their personal belongings they will be placing inside of it. Getting covered doesn't have to be a tough task. Here's a little information regarding homeowners insurance policies which you may find rather helpful as you embark on the the journey of home ownership.

 Insuring the Structure of Your Home

These are 3 of the most common ways to insure the structure of your home.

• Replacement Cost – This type of policy pays the homeowner the cost of replacing the damaged property with the exclusion of a deduction for depreciation and limited to a maximum dollar amount.
• Extended Replacement Cost – An extended replacement cost policy covers a certain percentage over the limit, which gives homeowners protection against things such as a sudden increase in the cost of construction. The overage percentage is usually somewhere around 20%.
• Actual Cash Value – This kind of coverage pays the homeowner the cost to replace the home minus any depreciation costs for age and use.

 Tips for Insuring Your Home to Value

• Calculate the Cost to Rebuild Your Home: An easy way to calculate the estimated amount it would take to rebuild your home is to multiply the local building costs per square foot by the total square footage of your house. This by no means is considered an actual estimate, but it should give you a good idea of what the cost to rebuild might be. Other factors that may impact the cost to rebuild your home include the type of materials used, the style of the home in addition to other unique interior or exterior features.
• Don't Insure Your Home For the Market Value: It's recommended you never insure your home for its market value because the cost of rebuilding can always either increase or decrease.
• You Might Want to Insure the Amount of Your Mortgage – Most lenders require homeowners to purchase enough insurance to cover the total amount of their mortgage in order to cover the cost of rebuilding.

 Insuring Your Personal Belongings

• Replacement Cost Coverage: An insurance policy which pays the specific dollar amount required to replace damaged personal property without deduction for depreciation.
• Actual Cash Value: A policy which covers the amount needed for replacement minus the depreciation. Most homeowners insurance policies cover actual cash value unless specifically stated that it includes replacement cost coverage.

 Be sure that you check the limits of your policy in regard to your personal items such as jewelry, expensive clothing and electronics. Also, keep in mind that you will want to make an inventory of your personal belongings and update that list each year or whenever you make any large purchases.

 What Does Homeowners Insurance Cover?

Every situation is different, but most homeowners insurance policies typically cover total loss or partial damage due to natural events such as fire windstorms, hail or explosions in addition to theft and the cost of relocating while your home is being rebuilt or repaired. They also likely cover the legal liability of the homeowner in the instance that themselves, members of their family or their pets injure other people or damage their property. It's important for homeowners to perform annual checkups in order to keep up with an inventory of their personal belongings as well as the costs of building or remodeling.

The Costs of Homeowners Insurance

The average annual cost of a homeowners insurance policy can differ depending on multiple factors. For instance, the square footage of your property can play a role in the price of your insurance in addition to the crime rates in the neighborhood and how likely it is to be damaged due to natural disasters. As with any other insurance policy, the number of claims submitted by the homeowners over a certain period of time can also affect the price of the premium.

Tips to Help You Save on Your Homeowners Insurance Policy

• Maintain Good Credit - Some companies who offer homeowners insurance policies base their rates on the applicant's credit history, so it's important to maintain a healthy credit score in order to get the best deal.
• Increase Safety and Security - The majority of insurance companies offer up to 15% discounts on homeowners premiums if the home features things such as deadbolt locks, premium smoke detectors, fire extinguishers and surveillance systems. It's recommended you ask your insurance representative what is required in order to qualify for this kind of discount.
• Increase the Deductible – Similar to any type of insurance policy, increasing your out-of-pocket deductible can save you on your premium from month to month.
• Ask About Multi-Policy Discounts – You could be saving a substantial amount by combining your vehicle, homeowners and any other type of insurance you need. This is because many insurance companies also offer discounts to those who have multiple policies with them.
• Fortify Your Home – You may also be able to save a bit on your homeowners insurance premium by reinforcing the structure of your home to protect it in the case of a natural disaster. For example, you could look into installing a tougher roof or sturdier windows.
• Compare Coverage and Costs – Coverage and costs can vary from company to company depending on a number of factors. This is why you of course want to shop around for the best policy which fully covers your insurance needs before committing to just any company.

 All in all, an applicable insurance policy is a must have for any homeowner. As with any other insurance policy, it's important that you understand what exactly your policy covers and how it works. Also, make sure that you review your policy each year to ensure that your property is properly covered. If you have any questions or concerns regarding your coverage or the cost associated with your homeowners policy, you may want to get in touch with your insurance agent in order to have them clarify the details for you.

Property easements are more common than many people think. If you're planning to buy a new piece of property, you may want to check if any easements apply to it before you finalize your purchase. Want to know more about property easements? Here's a little information over the basics including what property easements are, how they work and the different types of them most commonly used today. While reading over this information, keep in mind that the laws can be quite different depending on the state in which the property is located.

What Are Property Easements?

To put it simply, an easement is the legal right to use the property belong to someone else for a specified purpose. Property easements are generally categorized as either negative or affirmative. A negative easement grants the title holder the right to not allow their property to be used by anyone else, while an affirmative easement allows the property to be used for a particular purpose that is legally deemed.

How Do Easements Work?

Any applicable easements are usually referred to in the deed for the property or on the title prepared by the title insurance company or professional real estate attorney. Easements are attached to the property, so they don't ever change if the title is transferred. In most states, it's not necessarily a requirement for previous owners to notify buyers of any easements on the property. This is why it's recommended that new home buyers find out if the property they are interested in has any easements that come with it before agreeing to the sale.

Types of Easements

Below are just a few of the most common types of property easements and what they might encompass. Don't forget that the laws and regulations regarding property easements vary by state to state, so it's important to look up the specific property easement laws in your area before purchasing property to avoid surprises.

- Utility Easements

Utility easements are usually given to a municipal utility company or the city and is by far the most common type of property easement. For example, a utility company may be provided an easement that allows them to use the property to run utility pipe lines and perform maintenance on them. If a piece of property holds this type of easement, the daily lives of the property owners is not really affected. They're able to live on the property, plant on it and even build on it as long as there's no interference with the city's use of the easement. There are many ways to find out which areas of the property are required to be in adherence of the easement laws. If need be, property owners should call the utility company or city hall to ask for a map of the easement locations. An official survey of the land will also display the location of any applicable utility easements.

- Private Easements

Some properties may also have a private easement. These kind of easements allow a private party to use a portion of the property for an explicit reason. Common private easements are in the instance of your neighbor having to take a path through your land in order to get to theirs, for sewer usage or even solar access. For example, if your neighbor has a private easement on your property, you may not be able to build or grow trees or plants that block sunlight from hitting their solar collectors. A few other examples of private easement are pathways or driveways that run through the property. If planning to purchase a piece of property, make sure you do your research in order to find out if it has any private easements attached to it. You should call the country clerk in order to locate the records associated with the property and keep a copy of them with your deed.

- Easements by Necessity

Sometimes a property easement doesn't even have to be written down and documented if it is absolutely necessary. When this occurs, it's known as an easement by necessity. For instance, if it is absolutely necessary for someone to cross your land for a legitimate reason, the law grants rightful access to the property. If the property is subject to an easement by necessity, by law the landowner must not interfere with the neighbor's access.

 - Prescriptive Easements

A prescriptive easement is a type of legal ownership by another party over a particular piece of the property for a specific period of time. This may occur when a neighbor needs access to a driveway, path or shortcut and so they buy the rights. The length of prescriptive easements varies by state, but it's usually somewhere round 10-20 years. Prescriptive easements and adverse possession are fairly similar, but there are a couple of major differences that set the apart. In some states, the neighbors using a portion of the property are not required to pay property taxes on it if they choose to purchase a prescriptive easement. It's really in the best interest of the property owner to avoid prescriptive easements by discussing the terms with the neighbors and granting them written permission to use the property. If you give them written permission, they are no longer legally considered a trespasser, so they are not allowed to file a prescriptive easement on the property.

These are just a few type of easements that may affect property. Since every situation is unique, there are many other special circumstances which may call for a different kind of easement. To prevent any surprises down the road, you definitely want to look into easements on any property you are considering purchasing. As mentioned above, the laws and statutes regarding property easements can vary from state to state. To get a better understanding of the specifics in regards to property easements in your state, you should get in touch with a local real estate attorney. He or she should be able to provide you with the legal documents pertaining to the different kind of property easements applicable to your area.

There are many different terms that are related to the buying and selling of property making it quite easy to get a little confused. It's safe to assume that mostly everyone already knows that a property deed is an official document used to transfer real property from a seller (grantor) to a buyer (grantee). While property deeds are fairly common, not many people are aware that there are many different kinds of deeds associated with the transfer of property. This is because each buying or selling experience is unique and the type of deed needed depends on the specific terms and type of property. Whether you're planning to buy a new piece of property, sell your home or perhaps get into the real estate industry yourself, you should know the basics about the most popular types of property deeds. To give you a better understanding of the different options, here is a little about some of the most common property deeds used in today's world of real estate.

General Warranty Deeds

The most basic form of property deed is known as a general warranty deed. This type of deed includes a warranty, which means that the seller will offer protection for the buyer against other interests who attempt to claim ownership or in the case of blemishes on the title such as previous mortgages, liens or judgments. If any problem with the title does arise, the seller will be held responsible and will have to pay the buyer any damages accrued. Most buyers who get a mortgage loan from a banking or lending institution prefer having a general warranty deed because they provide the most protection for the grantee. Also, most title insurance companies are far more likely to insure a piece of property with a general warranty deed.

Special Warranty Deeds

A special warranty deed is actually fairly similar to a general warranty deed. The only big difference is that a special warranty deed limits the guarantee provided by the seller to current or future claims against the property, but not prior to that time. This means that a seller will only be responsible for debts or problems with the title that occur during or shortly after his or her ownership of the property. The laws regarding special warranty deeds varies state to state, so you may want to research the regulations for the state you live in or are planning to purchase property in.

Grant Deeds

A grant deed doesn't actually offer any type of warranty. It's basically used to assure the buyer (or grantee) that the title for the property does not legally belong to anyone else other than the grantor. It also guarantees that there are no other problems associated with the title that would inhibit the transfer of the property. The document itself simply describes the property and contains language granting the grantee ownership. Generally, grant deeds are used in some states such as California, while most other states usually require some type of warranty deed for the transfer of property.

Quitclaim Deeds

A quitclaim deed isn't necessarily a document to convey actual property, but instead is used to divest a party from any current or future interest in a particular piece of property. These type of deeds are commonly used during a divorce when the property was owned by two individuals who agreed that it will be transferred to only one spouse. Other than that, quitclaim deeds provide little to no protection to the person receiving the property. Unlike other types of deeds that include warranties, a title search is not performed to draw up quitclaim documents, so they don't ever guarantee a clear title status. This could mean that the person receiving the property may be left responsible for any claims or title problems that may arise after the signing of the quitclaim.

Deed for Bargain and Sale

Also referred to as a “bargain and sale without covenants”, this type of deed poses the greatest risk for grantees as it is usually used to convey property that has been purchased at a foreclosure auction or sheriff's sales. These documents do identify the bank or other type of lega institution as the legal titleholders for the property, but it does not guarantee that the title is clean. Although, it's important to note that if you do end up purchasing property at a sheriff's sale or auction, any information regarding past due taxes should be made available to the buyer. Just keep in mind that while you may be getting a good deal upfront, you could possibly be surprised down the road by how much you could end up owing.

As you can see, there are many different kinds of property deeds. It's important to keep this information in mind if you are planning to buy or sell your home or property. Most mortgage lenders and title insurance companies prefer buyers to attain a general warranty deed before proceeding with the loan or coverage because it's the deed that provides the most protection. There are some instances when they allow special warranty deeds, but it's not too entirely common. To find out which property deed best suites your situation, you may want to talk with your title insurance representative, your real estate agent, broker or lender. All of the documents needed to establish one of these deeds should be available at your local tax office or courthouse. Make sure you fill out the appropriate forms for the deed you need, then have them signed by both parties and notarized by a qualified notary before being filed with the local county office. Laws regarding the recording of deeds varies by state, so you may want to research the guidelines for the state you live in. As a matter of fact, you might not actually have to do the filing of the documents yourself because it's usually handled by your escrow agent. He or she should then provide you with a copy of the deed and verification that is has been legally recorded.

One of the last steps of purchasing a home is paying all of the closing costs. These costs are generally fees associated with the purchase of the home that are charged by the lender or a third party. The home buyer typically pays the closing costs, but motivated sellers sometimes agree to cover them in order to quickly sell their home. Here are some basic answers to frequently asked questions regarding closing costs you might find helpful when you make the decision to buy your first home.

 What All Is Included in Closing Costs?

Closing costs will obviously vary based on a number of factors including the area where the property is located and the state you live in. Featured below are just a few of the fees that may be included in the closing costs that the buyer is required to pay before purchasing a home. Keep in mind that all home buying transactions are different and your closing costs may include all of these charges, only just a few or perhaps others that are not listed.

• Credit report fee
• Loan origination fee
• Attorney's fees
• The home inspection fee
• Pest inspection fee
• The survey fee (for verifying property lines)
• An appraisal fee
• Discount points (fees you pay in exchange for a lower interest rate)
• Title insurance
• Title search fees (pays for a title background check to ensure there are no unpaid mortgages or tax liens on the home)
• An escrow deposit
• A recording fee (paid to the city or county to have them document the new land records)
• An underwriting fee (covers the cost of reviewing the application for the mortgage loan)

 Can Closing Costs Be Avoided?

There are a few ways home buyers can avoid paying closing costs. Some lenders offer no-closing cost mortgages depending on certain special circumstances. Although you won't have to pay the closing costs at the time of closing on your new home with one of these mortgages, you may end up paying more in the long run. This is because the lender will most likely charge you a higher interest rate or include the closing costs in your monthly mortgage payments. Another way you can avoid paying closing costs as a buyer is by negotiating with the seller. As previously mentioned above, some motivated sellers will agree to cover some, if not all, of the closing costs to speed up the selling process. Some types of loans, such as VA loans, actually require the seller to pay a portion of the closing costs.

When purchasing a new home, it's important to keep in mind that you need to budget in order to cover the closing costs before you even apply for the mortgage loan. While some buyers can avoid paying most of these fees, it's best to ensure that you can cover them just in case. Being prepared can better ensure that you will be able to move in to your dream home as soon as possible.

There are plenty of unique terms that deal with the application process and mortgage loans. You've probably heard of the term escrow a time or two, especially when discussing your mortgage loan with your lender. While it's a fairly common word in today's business world, not many people know exactly what it means, what it covers and why it's needed. If you're one of these consumers who happens to be totally in the dark, here is almost everything you need to know about escrow and what it means for you as a new homeowner.

What Is Escrow?

The best way to define escrow is the process of giving a neutral third party something of great value until the specific conditions of the contract are met by both parties. This is done in order to protect the buyer, the seller and the lender while the transaction is in progress. The material of value usually pertains to a deposit of funds known as an earnest money check, a deed or the sales agreement. Once everyone is paid and the deed is recorded with the county, the escrow will then close and be finished with.

 Who Handles The Escrow?

The most important factor of escrow that it is handled by an impartial third party who has nothing to gain nor lose from the transaction. Depending on the specific laws in the state you live in, that third party could be anyone from a qualified escrow agent, to a title agent or even a closing attorney who specializes in real estate. There are also many reputable escrow or title companies who do nothing other than handle paperwork for a sale and notify each party of what needs to be done. At the close of the escrow, the seller will then receive their funds from the buyer or their lender and the ownership of the home is then transferred to the buyer.

 How Long Is An Escrow?

The length of an escrow really depends on the terms set forth in the purchase agreement and can typically range from just a few days to several months. To give you a good idea of just how long it can take, the average amount of time it takes to close an escrow for a home purchase is about 40 days. The process can take longer depending on how much paperwork is involved as it can take the escrow agent awhile to review it all. Before the real estate market bubble in 2008, escrow took about 30 days, but lenders are now taking extra time to review appraisals and other documents. This is why an escrow now takes a little longer to close.

 How Much Does Escrow Cost?

There usually isn't an upfront fee associated with escrow because most escrow agents take a small percentage of the cost of the home. This percentage will likely range from 1%-2% but can be more depending on where the property is located or other special circumstances. The broker usually recommends an escrow holder, but it's important to note that in order to protect everyone involved in the transaction, there are laws that prohibit escrow services from charging a referral fee.

Escrow Accounts

Besides having an escrow between the buyer and the seller, most lenders will proceed with a second type of escrow known as an escrow account. These accounts are designed to let the lender collect property taxes and insurance from the buyer each month along with their principal and interest. This is of course to protect the lender in case the buyer doesn't cover the home with insurance or pay the property taxes. Some lenders require escrow accounts and some don't, so it's best to find out the specifications before you agree to the mortgage loan. Also keep in mind that an escrow account will likely be required on all high-risk loans such as those with only a 20% down payment. This is because you have less equity in the property and the lender wants to protect themselves.

The way escrow accounts work is pretty simple. At the end of each year, the lender will adjust the buyer's monthly escrow amount based on the actual tax and insurance bills. If the payments come up short, the buyer will generally absorb the remainder by spreading the difference out over the next 12 months. If the buyer paid an excess amount of funds, they will then be refunded by the lender.

 Hold-Back Funds

While most escrows close with no problems once the terms of the agreement have been met, there are certain circumstances that may lead to the funds being held after the home ownership transfers to the buyer. For example, if the buyer is letting the seller and their family stay in the house for a week or so after closing. If this is the case, the escrow agent may hold back a portion of the seller's proceeds until they have fully moved out in order to pay the buyer according to a “rent back” agreement established in the contract. Another instance where a hold-back may take place is if there was a problem discovered on the final walk through of the home and the seller agreed to make the repair but it couldn't be completed before the time of closing. The escrow agent will then hold-back enough funds to cover the cost of the repair just in case.

 Why Do I Need An Escrow?

Whether you're a buyer, seller, lender or borrower, you undoubtedly want to protect yourself with escrow during the home buying or selling process. This is because you of course want to ensure all of the instructions in the contract have been followed by all parties before the money or deed is transferred. The escrow agent will safeguard all of the funds and important documents until all provisions of the agreement have been fully met and then properly distribute them at closing.

Escrow isn't just used during the home buying or selling process. It's also fairly commonly used for the transfer of other high quality properties such as websites, cars and businesses. Hopefully you now have a better understanding of what escrow is and why it's so important for buyers, sellers and lenders.

There really is no better feeling than closing on a mortgage that gives you the opportunity to venture into home ownership for the first time. Once you have gone through the tedious and at times lengthy mortgage loan application process, it will then be time to meet with the lender in order to sign the final paperwork. If this will be the first time you have taken out a mortgage loan, here's a checklist of everything you need to consider when preparing for your signing appointment.

1. Obtain a Copy of Your Estimated HUD-1 Settlement Statement Prior to Your Appointment

You'll want to ask your escrow officer for a copy of your HUD statement days prior to your closing appointment. This document clearly discloses all of the fees associated with the transaction so you can know exactly what you will be paying for. Escrow officers will usually email this document to their clients a few days before signing, but it's important to let them know you'll want to review it before your appointment in case any situation arises that might delay the delivery.

2. Bring Along the Contact Information of Your Mortgage Originator

Before you set your closing appointment, you might want to ask your mortgage originator if they will be available during your signing and for the best way to reach them if you should have any questions. Most mortgage originators will try to attend closings if their schedule permits but if not, they should only be a phone call away. If you happen to have a question at any time during closing, you can pause the signing and call your mortgage originator so they can help to clear things up for you.

3. Bring a Copy of Your “Good Faith Estimate”

You also want to bring a copy of your GFE (Good Faith Estimate) in order to compare it to the Estimated HUD-1 Settlement Statement that will be provided to the buyer at the time of signing. In the best case scenario, the escrow officer will provide the loan originator with a copy of the HUD well in advance of the signing so they can review it before your appointment.

4. Bring Identification

The notary must prove that you are indeed who you say you are before they sign off on the paperwork, so be sure to bring proper identification to your appointment. Of course you will need to provide the notary with your driver's license, but some of them might actually require at least two forms of identity. It's best to contact your escrow officer before your appointment to ask what you should bring if you're not sure.

5. Make Financial Arrangements

The escrow company should notify you of the amount you will have to pay upon signing the loan agreement, so make sure you make arrangements to pay them before you head to your appointment. You can bring along a cashier's check for the final amount or contact the company to make arrangements to have the funds wired to them.

 After reading through the above checklist, you should hopefully now feel prepared for your singing appointment to finally close on your future home!

When applying for a mortgage loan, you need to keep in mind that the lenders require borrowers to submit the appraisal information for the property before they agree to finance the purchase. Some lenders may take care of ordering the appraisal for the property but will still charge you for it, unless it is already calculated into the mortgage rate. Also, most highly motivated sellers usually have the property appraised before placing it on the market in order to save new buyers the hassle and a little extra money so the home can sell sooner. If you're thinking about purchasing your first home and not quite sure what exactly an appraisal is and why you need one in order to get a mortgage loan, here's a bit of information you may find rather helpful.

 What Is An Appraisal?

An appraisal is simply defined as an opinion of value in regards to a particular piece of property and the home itself. Home appraisals are conducted by accredited appraisers that are licensed by the state to assess the size, condition and quality of the home. Home buyers must provide lenders with a full appraisal report to establish a property's market value so they don't overpay for a home. Lenders do this in order to protect themselves by avoiding the possibility of loaning the buyers more money than the property is actually worth.

 How Are Appraisals Determined?

Typically, there are three parts to the appraisal process. First, the appraiser comes out to the property and fully inspects the home and its perimeters. After the full inspection is completed, he will then research up to 3 similar homes in the area and compare recent sales in order to determine a fair market value. Once the appraiser has completed his or her inspection of the home and compared other properties in the area, he or she will then issue a final appraisal report. This final appraised value is more than likely determined by how much the appraiser thinks it would take to rebuild the home from the ground up. If you plan to rent the property out to tenants, the appraisal report might also include the projected amount of monthly income you should receive and the expenses that will be required in order to maintain the property.

In order for both the lender and the home buyer to be provided with an appraisal that is completely fair, the appraiser should be an objective third party who has no personal connection to any person involved in the transaction or the potential to gain financially other than the appropriate fee. There are quite a few things that can help raise the appraised value of a home including features such as a solid foundation, enclosed garages, appealing landscaping and updated kitchens. Usually the turn around time for an appraisal is anywhere between 3-7 business days in most states. It's important to keep in mind that if the property is in a remote area, it could take a little longer to get an appraiser out to inspect the home.

 Appraisal Costs

The cost of an appraisal can range from anywhere between $200-$600. A few of the factors that may affect the total cost of an appraisal is the area of the home, the property type and square footage. Understandably, an appraisal for a multi-unit property or one in a rural area will generally cost more than a single-family home in a densely populated area. The most basic type of appraisal provided by professional appraisers is known as the URAR (Uniform Residential Appraisal Report). This particular report consists of both interior and exterior photos, comparison sales which are also known as “comps” and a thorough breakdown of the appraised value for the property.

 What's the Difference Between An Appraisal and A Home Inspection?

Some first time home buyers believe that an appraisal and a home inspection are the same thing, but they're not. A home inspection differs from an appraisal because it entails having a licensed home inspector evaluate the structure of the home and its mechanical systems such as the heating, plumbing and air conditioning. A home inspector will also check out the quality of the roof, the chimney or any other attached structure. The appraisal is more centered on the potential sale price of the property by comparing similar homes in the neighborhood, the curb appeal of the home and any added desirable amenities.

 The Appraisal Review

Once the appraisal has been completed by a local appraiser, the majority of lenders will then order a review of the appraisal. This review is generally conducted by a different appraiser or by using an Automated Valuation Model, also known as an AVM. If the appraisal review happens to come in low or if the property is deemed unacceptable, the lender may decline the loan all together and deny financing to the buyer. Even if the borrower has an impressive credit score, a long history with the lender and a generous amount of assets, a flawed structure or overvalued property can kill the entire deal.

As of January 2015, Fannie Mae (the Federal National Mortgage Association) now allows lenders to use a proprietary tool known as a “Collateral Underwriter”, or CU. This unique tool automatically provides lenders with an appraisal risk assessment which includes a risk score, any red flags and messages notifying the lender that they may want to further review certain aspects. It works by analyzing a large database of property records, market data and diagnostic models to determine the potential risks.

As you can see, a professional appraisal is always required before you seek financing for a particular property from a lender. Hopefully this information has helped you become a better informed home buyer so you're not surprised by appraisal fees when it comes time to getting a mortgage loan. To find a reputable appraiser in your area, you may want to do a little online research or ask your broker for a few references. It also never hurts to ask your friends and family who they had perform the appraisal for their last home purchase. Just make sure the appraiser is licensed in your state and trustworthy so you can avoid running into any discrepancies that may lead to the decline or delay of your loan.