What is home warranty program?

            Beginning the journey of home ownership can be incredibly exciting, but it can also be quite daunting for inexperienced home buyers. This is because there are all kinds of things that could go wrong. If something suddenly breaks down or stops working in the home, the majority of first-time homeowners will likely not even know the first steps they should take to make the necessary repairs. One of the best ways to ensure that you're protected after buying a home is to obtain home warranty coverage. A home warranty plan is especially recommended if you're a first-time home buyer with little to no experienced maintaining a home. Are you a new homeowner or seller thinking about protecting yourself with a home warranty plan? Here's a bit of information about home warranties to give you an idea of why it's so important.

Who Pays for the Home Warranty

Who will be paying for the home warranty really depends on the situation and the local customs. In most instances, the seller is the one to pay for the home protection plan and for home warranty coverage to ensure he or she is covered in case anything goes wrong. It's common for the seller to pay for the home warranty plan because it provides them the most benefit by allowing them to not worry about the home buyer calling on them if something happens to break or malfunction. Instead, the issues will be handled by the home warranty company. Many real estate agents will even give buyers a home warranty at closing as a common courtesy.

How Much Does a Home Warranty Cost?

Generally, a home warranty is fairly inexpensive and affordable for most home buyers. In most states, a basic home warranty plan costs around $200-$400 depending on the type of coverage and the value of the home's electrical or mechanical features. Many home warranty companies sometimes offer home buyers with special discounts and even occasionally run promotions that could lessen the cost of coverage. A home warranty policy is paid upfront once year in advance and covers the homeowner for that entire period. At the end of the year, the warranty expires and the homeowner can then choose to renew the policy or not.

Types of Home Warranty Coverage

The type of home warranty you need is based on a number of factors such as what you want to cover and the age of the home. Since warranty plans vary, you may want to contact your real estate agent in order to find out what would be the best plan for you. Be sure that you pay attention to what the home warranty covers as some will pay for certain repairs, while other do not.

How a Home Warranty Works

Home warranty plans are all different because they're usually constructed around the needs of the home buyer and the specific of the home they purchased. While they may differ, home warranty plans generally follow the same protocol. Below are the steps that are taken when a home buyer need his or her home warranty plan to cover a break or system failure.

  • Once the homeowner realizes that an entire system or a particular appliance is broken or no longer working, he or she calls the warranty company.
  • The representative or agent from the home warranty company notifies a local provider with whom they have a predetermined business arrangement.
  • The provider then calls the homeowner in order to schedule an appointment for a visit to determine a plan of action.
  • After reviewing the break or malfunction, the provider then fixes the problem if possible. If for any reason the provider is not able to repair the system to solve the issue and depending on the kind of coverage the homeowner has, the home warranty company will pay to replace the appliance or system.

What is a Trade Call Fee?

Whenever a service contractor visits a home in order to diagnose a problem, the homeowner is required to pay a “trade call fee”. This small fee covers the visit and the amount is determined in the initial contract.

What Does a Home Warranty Plan Cover?

Below are a few of the aspects of a home that are generally covered by most home warranty plans.

  • Dishwashers
  • Air conditioning
  • Doorbell systems
  • Heater or furnace
  • Ductwork
  • Water heater
  • Garbage disposal
  • Indoor plumbing
  • Electrical systems
  • Oven
  • Telephone wiring
  • ceiling fans

What Is Not Covered by a Home Warranty Plan?

Here are just a few of the things that are typically not covered by most home warranty plans:

  • Faucet repairs
  • Appliances such as refrigerators, garage door openers or washers and dryers
  • Spas or pools (unless added)
  • Permit Fees
  • Outdoor items such as sprinkler systems
  • Haul Aways

Keep in mind that things such as washers and dryers, spas or pools and refrigerators can all be covered by a home warranty if initially added to the plan.

What Can Cause a Denial of Payment?

A home warranty company can actually refuse to pay for the repair or replacement. This usually happens if the homeowner has not been properly maintaining the home, if he or she has violated any codes, if equipment was improperly installed or if there appears to be unusual wear and tear on the property. If you disagree with the diagnosis or denial of payment, you may want to call your real estate agent as he or she can talk to the home warranty company to see what can be worked out.

As you can clearly see, a home warranty plan is always recommended for new homeowners for a number of valid reasons. Since home warranty coverage can vary according to the state you live in, it's highly recommended you discuss your options with your real estate agent before you commit to any warranty plans. He or she will be able to answer any questions you have and make sure you get the proper coverage in order to provide you peace of mind as you move into your new home.

Mortgage Insurance – What is PMI and how does it work?

If you've ever had a mortgage loan, you may have been a little surprised to find out that the lending company requires you to have mortgage insurance. Not very many first-time home buyers are aware that most big mortgage companies and the government require borrowers to obtain a mortgage insurance policy to ensure that they will get paid in full if you ever happen to default. You'd be pleased to know that not only does mortgage insurance benefit the mortgage lender, it's also rather beneficial for borrowers. This is because having mortgage insurance allows borrowers to purchase a home before they have accumulated the full 20% down payment. Are you planning to purchase a home soon and currently considering getting yourself covered with mortgage insurance? Perhaps your lender has already notified you that you will indeed have to pay for mortgage insurance. Whatever the situation might be, here's everything you need to know about mortgage insurance and everything that comes along with it to make you a more knowledgeable borrower.

Types of Mortgage Insurance

Generally, there are two basic kinds of mortgage insurance and the type that you will need depends on the mortgage loan you will be getting. These two different types are mortgage insurance purchased from the government and mortgage insurance that covers loans from the private sector. The mortgage insurance purchased from the government is understandably designed for borrowers with an FHA or a VA loan. Mortgage insurance for conventional loans from a private mortgage company is usually referred to as PMI (Private Mortgage Insurance).

Who Needs Mortgage Insurance?

When it comes to private loans, most lenders will require borrowers to carry mortgage insurance if their down payment is less than 20% of the home's value. Normally borrowers are required by lenders to be covered with mortgage insurance until their loan-to-value ratio (LTV) is at least 80%. The loan-to-value ratio is most simply put as the amount of money borrowed divided by the actual value of the home. By regularly paying your mortgage payments, your LTV will eventually start to decrease. As for government loans, mortgage insurance is typically required regardless of the LTV.

How Much Does Mortgage Insurance Cost?

Mortgage insurance rates can vary depending on a number of factors. For example, the lower down payment you provide or a low credit score will subsequently mean you will be paying a higher mortgage insurance premium. For most home buyers, monthly mortgage insurance premiums generally range from around $30-$70 for every $100,000 borrowed. Insurance rates are a little different when it comes to FHA or VA loans backed by the government. For FHA loans, there is an up-front MIP (Mortgage Insurance Premium) and an annual premium which is collected from the borrower on a monthly basis. As for VA loans, borrowers are required to pay an up-front funding fee but do not have to pay an annual or monthly premium. If you have any questions about mortgage insurance premiums or current interest rates, you may want to contact your lender to get a better idea about all of the specific details.

Paying for Mortgage Insurance

Most borrowers pay both their mortgage insurance premiums long with their monthly mortgage payment. In most circumstances, you can just send in one single payment to the lender that covers both the insurance and the loan payment. Some lenders may also allow borrowers to pay their PMI in one lump sum at closing or incorporate the financing of the premium into their loan payment.

Why Do I Need Mortgage Insurance?

Mortgage insurance is usually required by lenders because it protects them in case you are no longer able to make your mortgage payments. If you ever do happen to default on your mortgage loan, the lender will be paid in full by the mortgage insurance.

Ways to Avoid Having to Get Mortgage Insurance

When it comes to conventional private mortgage loans, there are a couple of ways to avoid having to pay monthly mortgage insurance premiums. One of the best ways to avoid paying for mortgage insurance is by providing more than a 20% down payment. This is because you will have more invested in the property which makes the lender more comfortable with your ability and willingness to repay the loan.

When Do I No Longer Need Mortgage Insurance

Once you build up a substantial amount of equity in your home, you can eventually request to cancel your mortgage insurance. Under most circumstances, the lender will not automatically cancel the PMI until you've attained at least 22% equity based on the initial appraisal value. As a matter of fact, lenders are required by the federal Homeowners Protection Act to cancel mortgage insurance once the amount of money the borrower has paid back equals 22% of the home's purchase price. If you keep track of your payments and realize that you have reached at least 20% equity, you can also contact the lending company yourself to request your PMI to be canceled. Once it is canceled, you can then invest the extra money into building even more equity in your home to one day make a rewarding profit when it's time to sell. On the other hand, FHA-insured loans require borrowers to pay mortgage insurance premiums for the full life of the loan. The mortgage insurance premiums for FHA loans can never be canceled and if necessary, borrowers will have to refinance the loan.

Hopefully you now have a better understanding of what PMI is, why it's necessary and what it covers. While it may seem a little expensive, there really is no question that getting covered with mortgage insurance is a good idea even if you're not necessarily required to have it. Although, if you want to avoid having to pay monthly mortgage insurance premiums, you should probably create a savings account to save money that will add up to more than a 20% down payment. If you happen to have any further questions regarding mortgage insurance as it pertains to either private or government loans, you may want to contact your lender for information applicable for you and your loan type.

What should a pre-approval letter contain?

Once you find out just how much you can spend on a home, you'll then know which properties you can start looking at. In fact, real estate agents for the most part won't even begin showing you homes until you have submitted a pre-approval statement. There are some lenders who may provide you with a pre-qualification statement before analyzing your credit report, but it's actually recommended you obtain a pre-approval letter instead because they're much more reliable. If you will soon be applying for a mortgage loan in order to buy a home, you'll want to be aware of what all should be included in your pre-approval letter. To become a better informed home buyer, take a look at all of the details your pre-approval letter should contain.

Pre-approved Loan Amount – Of course every pre-approval letter will let you know the loan amount that you could possibly receive from the lender.

Dates – Your pre-approval letter should have the date it was given to you and the date that it expires. If the document is older than 30 days or so, the lender might find it necessary to draw up an entirely new letter.

Terms – Most pre-approval letters will clearly state that the home must have a clear title which can be easily transferred and that it must be appraised for at least the selling price.

Loan Conditions – Your pre-approval letter will also contain information regarding the type of loan program you have been approved for. This will lay out any conditions you need to meet in order to qualify for the loan such as your most recent bank statements, information from your employer, a certain down payment amount or verification of your rental history.

Interest Rate – The letter should also let you know the current interest rate on mortgage loans. It's important to remember that while this interest rate can give you a good estimate, it's likely a floating rate. This means that the rate is subject to change at anytime without any notice.

Payment Information – Pre-approval letters also inform buyers of what the payment process will be like if they are approved for the specified loan amount.

Contact Details – Every pre-approval letter should also feature all of the contact information for your mortgage lender in case you have any questions or concerns regarding lending.

Keep in mind that in some states such as Texas, a pre-qualification or pre-approval letter is required and must adhere to the laws and regulations set by the state. If you live in one of these states, make sure your lender provides you with the right documentation to avoid any confusion or issues that could delay your purchase. When picking up your pre-approval letter, you may also want to ask your lender for a copy of the “Good Faith Estimate” (GFE) in order to get a better idea of what the closing costs might be. All of this information put together can best prepare you to begin the process of finding the perfect home to call your own.

PreApproval vs PreQualification

If you've ever applied for a mortgage, you most likely noticed that there are a variety of specific terms associated with the home buying process. Many of these terms related to the real estate industry are fairly similar, which can easily confuse inexperienced home buyers. For instance, a couple of these particularly confusing terms are pre-approval and pre-qualification. The majority of first-time home buyers think that these two real estate terms have the same meaning, but that's actually not true at all. While both of these terms deal with the amount of lending you may receive from a bank or mortgage company, they are quite a bit different from one another. Take a look at some of the differences between pre-approval and pre-qualification in terms of mortgage loans and real estate transactions.

Pre-Approval – A pre-approval is usually the most dependable and accurate estimate of how much you can afford to spend on a home. This is because a pre-approval is mainly determined according to the information you provide the lender and the results of your credit report. Once the lender looks into your credit history, they're then able to decide what would be the appropriate amount to lend based on data such as your overall credit score and your debt-to-income ratio. Being pre-approved for a certain amount is recommended because then you won't be looking at properties that may be out of your price range, which is the best way to avoid disappointment down the road.

Pre-Qualification – On the other hand, a pre-qualification is a bit more basic than a pre-approval because it is not at all based on your credit history. This means that the lender has no other choice than to rely solely on the information you provide them. If the credit score and amount of debt you provide them with is not accurate, you will most likely get pre-qualified for more than you can actually afford. While some people prefer to go with a pre-qualification when they begin house hunting because it doesn't require them to submit their social security number, it could cause some serious problems. For example, if you get pre-qualified for a loan amount and then find a home that you believe will fit your budget only to find out that you can't afford it based on your credit and debt load. You'll probably be terribly disappointed and will have to start the house hunting process all over again.

Once you begin taking the steps to purchase a new home, you'll soon discover just how stressful it can actually be. Having an idea of the differences between a pre-qualification and a pre-approval can better prepare you to take on the task of find your perfect home. Most home buyers are really best off getting pre-approved instead of pre-qualified so they can be confident when shopping for a home in order to save time and avoid disappointment. As a matter of fact, some mortgage lenders only use pre-approvals and don't even provide pre-qualifications. Keep this bit of information in mind as you begin your search for a place you can officially call your own.

Explaining the Loan Process Mortgage Underwriting

There's no question that the majority of home buyers need to take out a mortgage loan in order to purchase property. Of course buying a home can be a rather exciting experience, but it can also be quite a stressful one because there are many steps involved in the loan process. The very last step absolutely necessary before you are able to finalize your mortgage loan and purchase your new home is known as underwriting. Not sure what mortgage underwriting is and what all it entails? Here are all of the things you need to know about underwriting home loans in order to help you become a well informed borrower.

What is Mortgage Underwriting?

Underwriting is one of the most important factors when it comes to obtaining a mortgage loan. This is because underwriting is the final step of your mortgage application and could very well impact your ability to go through with the transaction. During the underwriting process, a trained professional who is employed by the lending company known as the underwriter will review all of the application information in order to determine if the loan should be approved or not.

What Does A Mortgage Underwriter Do?

The underwriter plays a major role in the lender's decision to either approve or deny your application for a mortgage loan. To determine whether you're a good loan candidate or not, these are just a few of the many things a mortgage underwriter will look at:

  • Ability to Repay the Loan – The lender will want to know your ability and your willingness to repay the loan, which is why the underwriter will review your credit rating, your financial background and your history with previous lending.
  • The Home You Wish to Purchase – The underwriter will also look at the home you want to purchase with the loan and if the price is fitting to the property. In order to be sure the home is appropriately priced, the underwriter will usually send out an appraiser to provide them with the market value of the home.

How Long Does the Underwriting Take?

The length of the underwriting process really depends on how complicated the loan is as well as the availability and the experience of the underwriter. An underwriter who is not so busy and has a great deal of experience in the industry can usually complete the underwriting in just a few days. If the underwriter has quite a few other loans to review before yours or if your application is a little complicated due to special circumstances, you could possibly be waiting up to a few weeks for a final answer.

Underwriting can often be the most stressful step in applying for a mortgage loan, but it doesn't have to be. The best way to avoid delays and speed up the process is to ensure that you are completely forthcoming with your lender about your financial background and credit history. If there are any surprises that arise during the underwriters investigation, it could take a whole lot longer to proceed with the purchase of your home.

Why do I need a Buyers Consultation Anyways!

Many first-time home buyers get excited and want to rush the buying process in order to get into their new home right away, but there actually are a few really important steps that should be followed. Once you've decided it's time to own your own home, the first thing you'll want to do is schedule a home buyer's consultation with a reputable real estate agent in your area. This is because a home buyer's consultation can help you determine your wants, needs and expectations as a first-time home buyer in addition to giving your agent an idea of what it is you're looking for. If you're a first-time home buyer and don't happen to think you need a home buyer's consultation, you may want to think again. Here are couple of the reasons why you definitely need to consult with a professional real estate agent before beginning the process of buying your first home.

Obtain Helpful Information – The process of buying your first home can get a little confusing at times if you're not familiar with the real estate industry, which is why many first-time home buyers are typically full of questions. If you have any questions regarding the home buying process or local real estate laws and regulations, you can usually get them answered during your home buyer's consultation. Your agent deals with these issues on a daily basis, so he or she will be the best one to provide you with helpful information before you begin your search for a new home.

Narrow Your Search – Many first-time home buyers are easily overwhelmed by all of the paperwork, permits, community ratings, fees and budgets. One of the worst things first-time home buyers can do is blindly start looking homes that are way out of their budget or that don't fit their needs. After attending your home buyer's consultation, you'll have a better idea where to start searching for your new home. This is because your agent can best help you determine which areas you should be looking in by providing you with helpful information about neighborhoods and price ranges. Once you have established your wish list as well as your list of must-haves, your agent can then begin sending you lists of properties you may be interested in.

Affordable or Complimentary – Not many first-time home buyers are aware that home buyer's consultations are usually a complimentary service provided by real estate agents. While most home buyer's consultations are free, some agents may charge a nominal consultation fee. If there is an applicable fee, it's likely a rather small price to pay for such assistance.

A home buyer's consultation is an extremely important step to purchasing a home. If you are a first-time home buyer, the very first thing on your to-do list should be to schedule your consultation. It's best to call your local real estate agent to set up an appointment for your home buyer's consultation or contact me if you would like any further information.

What does title officer do?

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.

Types of agency relationship

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.

Holding Titles On Real Property

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.

Homeowners insurance basics

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.

All information provided is deemed reliable but is not guaranteed and should be independently verified.