Month: January 2009

With all of the focus on the credit and mortgage markets of late, one of the bright spots in the housing market – and there are several – is that first-time home buyers are finding that homes previously out of reach are now becoming a reality, due to declining home prices.

With both Fannie Mae and FHA offering programs with low down-payment programs, some in the range of 3%, first-time home buyers owe it to themselves to at least take a look at what is available to them.

There are other incentives for first-time buyers, such as the $7,500 tax credit offered by the federal government. This is a no-interest loan, and the buyer has up to 15 years to pay it back. FHA allows the seller to offer up to 6% of the purchase price back to the buyer in the form of a seller credit. This credit can be used toward such items as closing costs.

It is advisable to get preapproved before going to a real estate agent.

There are a couple of reasons for this. Real estate agents, before spending time and expense to show potential buyers houses, want to know that their clients can in fact afford the houses they are being shown. The other reason is that borrowers who have been preapproved will have more credibility with sellers if more than one offer is made on a property at the same time.

Borrowers, once they qualify for financing, should always employ the services of a good real estate attorney and have him or her review everything before signing.

A title company coordinates the transfer of real estate from one party to another.  There are many steps involved in this process. From beginning to end it goes roughly as follows:

When a lender meets with a borrower, for either a purchase or a refinance, the  lender requests title, to find out what, if any, liens have been placed against the property.

In a purchase transaction, the lender will get a copy of title from the seller’s attorney.

In the case of a refinance, the lender (or broker) will order title directly from the title company.

The title company performs a title search, or abstract, pulling data from the recording body, usually the county, to determine what liens are on that property.

If there are unexpected liens, the borrower will be able to address them with the seller before closing.

A title company will often offer title insurance, which is insurance against liens being placed on the property after the search is performed, potentially causing the buyer expense at a later date.
Once the transaction is ready to go to closing, the title company will prepare closing documents and reconcile the figures from both sides of the transaction. Once both sides are in agreement, the title company receives then distributes the funds sent by the lender.

At the closing, the title company will review the documents with the borrower.

Keep in mind though that the titile company is unable to give advice or direct a borrower as to a course of action if questions arise. Borrowers should always have either an attorney or someone knowledgeable about the lending process involved.

After the closing, the title company will arrange to have the recordable documents sent to the recording body to be recorded.