Buying your dream home? Buy title insurance, too.

Buying Your Dream Home? Protect Your Property with Title Insurance

Purchasing a home is an exciting time for anyone, but that joy can soon fade if problems - such as lost or forged deeds or liens on the property - are revealed. Title insurance can protect buyers.

TOP CONSIDERATIONS

Examples of common title defects:

1. Lost, forged, or incorrectly filed deeds. Deeds are the documents that show who owns the property, and if not filed correctly, can lead to unclear ownership rights. This can include titles filed in the wrong name or titles never filed at all. 
2. Fraud. This can take many forms such as falsified documents making it appear as if a mortgage is paid off.
3. Construction and other liens. Unpaid contractors, homeowner association dues or property taxes can result in liens on the property. 
4. Encroachments. Physical structures, such as a neighbor’s fence, that intrudes on the legal property boundary can create title issues at closing. We always recommend getting a survey before you buy.

Types of title policies: Owner’s and Lender’s are the two primary types of title policies. 

An owner’s policy protects you for the purchase price of your home plus legal costs if a title or ownership issue arises. It is usually issued for the amount you paid for your home and will cover you as long as you own an interest in the property. An owner’s policy is not required but is a good idea to protect your own financial interest in the property. 

A lender’s policy protects the lender, and only the lender, if a title or ownership problem comes up after the property is purchased. Unlike an owner’s policy, the dollar amount that would be paid if there was a problem with the title decreases as you pay off the loan and ends when you pay off your mortgage. A lender’s policy is usually required to get a mortgage loan. 

THINGS YOU SHOULD KNOW

Know who you’re hiring: People often choose a title insurer and/or closing agent based on a referral from their real estate agent, lender, or home builder. Get quotes from multiple companies to ensure you are getting the best price. Check with your state insurance department to make sure the company is licensed to operate in the state. 

Start early: Once you have a signed agreement to purchase real estate, you have all the information you need to start getting title insurance quotes from companies. Start searching early to avoid delaying the closing. The buyer and seller don’t have to select the same title or closing agent so shop around to find the best deal for you. In some locations it is customary for the seller to pay for the lender’s policy, read your real estate contract to find out who is responsible for the title fees. 

Be cautious: Real estate often includes transferring large sums of money between buyers, sellers, banks, and closing agents. As a result, they are also a target for cybercriminals. Call your closing agent and lender right away if someone proposes a change to the payment transfer. Check email addresses closely when transacting business online. Call your closing agent and bank right away if something doesn’t seem right.

After closing, check that the deed was recorded in the county records: You can call your county recorder’s office (in New Jersey it is either the county clerk or register of deeds) or check its website to confirm the deed was recorded properly. Ensure the name and address is correct. If you received a loan to buy the property, check for the mortgage as well which will have the lender’s name and the property address. 

Keep a hard copy of your title policy and closing protection letter in a safe place: Title insurance safeguards your ownership rights for the entire time you own the home or property. You will need the policy documents to submit a claim. Title defects may not be found until you sell a property. 

TOP FOUR THINGS TO REMEMBER

•  A lender’s policy only covers the lender, so to protect your own financial interest, consider purchasing an owner’s policy. 
• Shop around for title insurance, even if you receive a title insurer recommendation from your real estate agent, lender or builder. Only by comparing prices can you ensure you are getting the best deal. 
• Take cybersecurity seriously when communicating transaction details through e-mail and ALWAYS pick up the phone and call the closing agent and lender to verify payment transfer details.
• Keep a copy of your policy in a safe place. You will need this information to file a claim.  

 

(Thanks to our friends at National Association of Insurance Commissioners for this information.)

 

We are the New Jersey title insurance agent that does it all for you. For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help!

For your real estate purchase or mortgage refinance or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow@vested.com

@vestedland

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Virtual real estate closings - not really

Real Estate Transactions Go Virtual

The traditional real estate closings with a room full of people and stacks of documents are becoming a memory, as much of the process is now online.

The above is the heading of an article in The New York Times.  Some quotes:

Real estate transactions have gone largely digital as the pandemic has disrupted nearly every aspect of home buying, from house hunting to securing a mortgage, getting an appraisal, notarizing documents and signing the final closing documents.

Well, not so fast, pardner.  This is an oversimplification of the entire closing process.  First of all, we have to define what is truly digital.  In New Jersey, contracts have been signed digitally for several years. The column recognizes that but it's a fact that we cannot transfer title to a home or mortgage property without ink signatures.

An appraisal?  Well, lenders have ordered them remotely for years, and email just makes it easier for the  appraiser to deliver her final product.  Is that revolutionary?  I don't think so.

Notarizing of documents is done is some jurisdictions remotely, but the pitfalls are obvious to anyone who is trying to protect their property rights.

While some clients continue to prefer in-person closings, others are giving their lawyers power of attorney to sign the final documents for them or they’re executing closings on virtual platforms like DocuSign.

It is becoming quite common for sellers to sign their documents ahead of time and deliver them to a third party, usually a title insurance agent such as Vested Land Services, to be held until the buyer completes the mortgage and her loan funds.  While it's true that many seller's give their attorney a "power of attorney," we recommend that it be expressly limited to signing off on the closing statement and miscellaneous documents that may be required by the buyer's mortgage company.

By all means, read the complete article here.

Your comments are always welcome.

 

We are the New Jersey title insurance agent that does it all for you. For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help!

For your real estate purchase or mortgage refinance or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow@vested.com

@vestedland

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The Tax Breaks for Homes That Help You Now

Homeowners need to know these income tax facts

Home office and second homes deductions

A column in the Wall Street Journal answers some timely questions about income taxes and your home.  

As this article appears behind a paywall at wsj.com/articles/the-tax-breaks-for-homes-that-help-you-now-11596792602, the full text is below.

August 7, 2020

By Laura Saunders

 The coronavirus pandemic has had profound effects on real estate, and the sudden shifts make it a good time to delve into tax breaks available to home buyers and homeowners.

 Many people are scrambling to get mortgages now that interest rates are under 3%, either to buy a home in a red-hot market or refinance debt on an existing one. Others, who are working from home far longer than expected, are itching to renovate their nest or add workspace.

 And then there are those who have moved to vacation homes for the long haul. Some are even social-distancing in motor homes or boats.

 The tax landscape for homeowners changed with the 2017 tax overhaul, which made the long-cherished mortgage-interest deduction irrelevant for many. For 2018, 13 million filers claimed this write-off, down about 60% from 2017’s total of 33 million filers. The overhaul also limited interest deductions on home-equity loans and repealed a benefit for some home offices.

 

But other tax breaks for homes remain, such as one allowing mortgage-interest write-offs for motor homes and boats. Loosened rules on withdrawals from retirement accounts could provide a source of funds for home buyers who need cash this year. A spokeswoman for TD Bank said it’s allowing such withdrawals to be used for down payments

 Whether you’re part of a backlog of buyers or mulling changes to your current home, here are answers to key questions—plus examples to show how the rules apply in different situations.

 Will I get a mortgage-interest deduction if I buy a home?

 Yes, but it might not lower your taxes, if your “standard deduction” is higher than your total itemized deductions listed on Schedule A.

 The 2017 overhaul nearly doubled the standard deduction, and now it’s $24,800 for most married couples filing jointly and $12,400 for most single filers. So millions fewer homeowners are itemizing.

 Typical itemized deductions are for mortgage interest, charitable donations, medical expenses and state and local taxes (SALT), such as property and income or sales taxes. SALT deductions are limited to $10,000 per tax return.

 Here are examples provided by Evan Liddiard, a CPA who directs federal tax policy at the National Association of Realtors. Say that a married couple buys a $400,000 home with a 20% down payment, a 3% interest rate and a 30-year fixed rate mortgage. The first-year interest deduction would be about $9,500.

 If the couple deducts that amount, along with the limit of $10,000 for SALT, they’d still need more than $5,300 in charitable or other write-offs to get above the $24,800 threshold.

 Many single filers will find it easier to get a benefit. If a single person buys a $250,000 home with 20% down and a 3% interest rate, the first-year interest is about $5,950. If this buyer lives in a higher-tax area and has $10,000 of SALT write-offs, then his total itemized deductions are more than $3,500 above the $12,400 threshold, even without other write-offs.

 How much mortgage interest can I deduct?

 For new mortgages issued after Dec. 15, 2017, taxpayers can deduct interest on up to $750,000 of mortgage debt on up to two homes.

 For mortgages issued before that date, a “grandfather” provision allows interest deductions on up to $1 million of mortgage debt on up to two homes.

 Here’s how these two rules can interact. If a homeowner has a grandfathered $800,000 mortgage on a first home and wants to borrow $100,000 to buy a second home in 2020, then the interest on the $100,000 wouldn’t be deductible. For more information, see IRS Publication 936.

 Note that the $750,000 limit applies per tax return, so unmarried couples who buy homes together can deduct interest on up to $1.5 million of mortgage debt. Some couples in high-cost housing markets have refrained from marrying in order to double their deduction.

 I’m refinancing my mortgage at a lower rate. Can I still deduct the interest?

 Yes, in many cases. But current law disallows deductions on the “cash-out” portion of a refinancing unless it’s used to improve a home.

 Say that a borrower with a $400,000 mortgage balance refinances at a lower interest rate but raises the balance to $450,000 in order to have $50,000 for college tuition. In that case, only the interest on $400,000 would be deductible. But if she uses the $50,000 to add a room, then interest on the $50,000 would be deductible, says Mr. Liddiard.

 Are “points” paid to get a mortgage deductible?

 Yes. Points are upfront interest payments that typically reduce the rate. Points paid for a first mortgage are usually deductible the year it’s taken out, while points paid on a refinancing typically must be deducted over the loan’s term.

 I want to borrow to buy a boat or RV. Can I count that as a home and deduct mortgage interest?

 Maybe! Mortgage interest on debt used to buy a motor home or boat can be deductible if it has cooking, sleeping and toilet facilities. The write-off is also subject to the other requirements, such as no deductions for more than two homes.

 Mortgage interest on these homes may not be deductible for the alternative minimum tax—but far fewer people owe this levy than before the 2017 overhaul.

 Can I still deduct interest on a home-equity loan?

 It depends. Until the 2017 overhaul, interest on up to $100,000 of home-equity debt used for any purpose was deductible.

 Now, such interest is deductible if it’s used to make substantial improvements to a home. The debt must be secured by the property it’s used for, and the $750,000 and $1 million total debt limits apply.

 Now that I’m working from home, can I take a home-office deduction?

 Not if you are an employee, because the 2017 overhaul repealed that write-off. But your company can likely reimburse you for your work expenses during the pandemic and get a deduction. The payment won’t be taxable to you, says Gerard Schreiber, a CPA who specializes in tax issues involving disasters.

 Workers who are self-employed, either full-time or part-time, can often deduct home-office expenses on Schedule C for a space that’s used regularly and exclusively for the business. (That means no watching sports on a couch in the office during off-hours.) For more information, see IRS Publication 587.

 I’m spending more time at home, and I want to remodel my house and add office space. Are there tax breaks for remodeling?

 Yes, in some cases. A business owner who builds or upgrades office space at home may be able to take deductions for costs. For example, a photographer’s expenses for adding a studio and darkroom to her home could be deductible over time on Schedule C, as could the interest on a borrowing to finance it.

 For homeowners without businesses, the cost of improvements such as an addition can raise the “cost-basis” of the house and reduce taxable profit when it’s sold. So if a house was bought for $250,000 and the owner made $150,000 of improvements, then the starting point for measuring the gain after a sale would be $400,000. The interest on a home-improvement loan can also be deductible.

 This year many people can withdraw more from such savings plans than in the past, and on better terms, because Congress loosened rules for people affected by the pandemic. These savers can withdraw up to $100,000 from IRAs and many 401(k)s without owing the 10% penalty that would often apply. Then they can spread the tax over three years or pay all or part of the withdrawal back, according to IRA specialist Ed Slott.

 I have a city home and a vacation home, and until the pandemic I lived in the city. If I make my vacation home my primary residence, can I avoid owing city taxes?

 Maybe—but rules vary widely, so seek professional advice tailored to your area. For example, people with jobs based in New York often owe taxes to New York even if they’re residents of other states.

 To switch your vacation home to your primary home, you may need to count days spent in each place. You may also need to make moves showing you’ve truly changed your residence, such as switching doctors, children’s schools, your place of worship, and where you vote.

 Write to Laura Saunders at laura.saunders@wsj.com

We are the New Jersey title insurance agent that does it all for you. For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help!

For your real estate purchase or mortgage refinance or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow@vested.com

@vestedland

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Understanding Title Insurance – and Why You Need It

Whether you are a first time #homebuyer or refinancing your #mortgage, title insurance is essential.  Here's an article from Zillow that tells you why.

You understand the benefit of car insurance and homeowners insurance, but chances are you’ve never thought about title insurance until you started the process of buying a house. What is title insurance? It’s a policy that insures that you won’t have any unknown claims made to the ownership of your home.

What could go wrong?

A clean or clear title is important because the title is what gives you ownership of a property. Imagine buying your dream home, closing the deal and then realizing the previous owner hadn’t paid property taxes for several years. Those taxes remain charged against the property and as the new owner, you are responsible. The taxing entity could even take your home. Or perhaps two sales ago someone sold the home without getting the signature of an estranged husband who now wants to stake his claim. Perhaps the previous owner didn’t pay a contractor for some work on the home and the company put a lien against the house. Or the power company shows up with a crew to take advantage of an easement though your new backyard. The scenarios are seemingly endless and tracking down every last possibility is more than you can practically do on your own. That’s where title insurance comes in.

An ounce of prevention

Unlike most insurance policies, you pay just a one-time fee and your property is covered for as long as you or your heirs own it. If you are taking out a loan to buy your home, the lender will require you to purchase lender’s title insurance to cover its investment. Essentially, the lender wants to make sure this is a legitimate deal with someone who has the full right to sell the property to you. But the lender’s policy will only cover the outstanding amount of the loan at the time a claim is made. You also want to make sure you have a policy that covers your interest, called an owner’s policy. When purchased together, the owner’s policy is a relatively inexpensive addition.

As you’ve probably guessed by the one-time fee, title insurance doesn’t work the same way most other policies do. The truth is that title insurers rarely have to pay out on claims. But that doesn’t mean you’re paying them for nothing. To the contrary, unlike other types of insurance, title insurance companies mostly incur their expenses upfront and help prevent any kind of title surprise later on.

While you are in the escrow phase of your purchase, the title insurance company will conduct a comprehensive search to make sure there are no such surprises lurking in the dusty files in some forgotten corner of the county courthouse. The title company searcher looks at deeds, wills, and trusts, tracing the history of the property back many, many years. The search can be manual or on a computer or both, depending on records in your area. Among the important questions is whether all past mortgages and liens have been paid. Does anyone hold an easement? Are there any pending legal actions? That’s where most of your insurance premium goes – to conducting that search. Then, just to make sure you’re protected in case they missed something, title insurance will cover your losses if it turns out later that they missed something.

In some areas, the cost of the title search and the title insurance are separate, while in other regions they are lumped together.

What kinds of policies are there?

What’s covered depends upon your policy. If you purchase only lender’s title insurance and end up losing your home to a previously unknown lien, your mortgage will be paid off. That’s the good news. The bad news is that you won’t get anything to cover the payments you’ve made, including the down payment. You’re out a house. That’s why experts advise buyers to get an owner’s policy as well.

Owner policies come in different flavors. A standard policy will generally cover you up to the purchase price of your home. If you want to protection that will cover inflation, you’ll want an enhanced policy or an inflation rider. That also provides coverage for liens filed after your closing date. Say, for example, you buy a new home and at closing everything is clear. The next day, a subcontractor who worked on construction of your home files a mechanic’s lien. Without an enhanced title insurance policy, you aren’t covered and may end up paying the subcontractor. It’s up to you to look at coverage and decide which owner’s policy you want to purchase.

Shop around

The only time you can purchase insurance is at closing. Whether buyer, seller or both pay for the coverage varies according to local custom. In some areas, the seller buys the owner’s policy and the buyer pays for the lender’s policy. Both policies take effect on closing day. The Real Estate Settlement Procedures Act prohibits sellers from requiring you to buy coverage from a specific title insurer. However, if the seller is paying for it, the seller can use whichever company they want.

You can purchase title insurance from whichever company you choose. But the reality is that your lender probably has a preferred title company and it is much cheaper to piggyback your policy onto the lender’s. If you have a strong preference, you may be able to convince the lender to use the company you prefer. Costs are fairly similar from company to company in any region.

If you find yourself looking at the prospect of finding a title insurance provider with dread and want to just go with your lender’s choice, don’t feel bad. You buy title insurance whenever you purchase a home. Lenders buy it several times a day. In this case, the lender’s interest – a good, solid insurance provider – lines up with yours. So don’t beat yourself up for not pushing back on selecting your own title company.

Is there anyone who doesn’t need it?

If you are buying co-op housing, cross title insurance off your list. When buying a co-op you won’t actually own real estate. Instead you’re buying shares in a corporation so no title insurance is needed. Everyone else? Pony up.

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, NJ, we are the title insurance agent that does it all for you.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

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Purchase a home with a small down payment? It can be done.

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. Vested Land Services LLC can help. Located in Fairfield, NJ, we are the title insurance agent that does it all for you. Contact us at 973-808-6130.

A Smaller Down Payment, and No Mortgage Insurance Required

Does the need for a 20% down payment to purchase that home have you stymied?  Well, mortgage insurance, an expensive proposition, is on way.  But this article from the NY Times has a solution.

How did they do it? They took out one loan equal to 80 percent of the purchase price, and another loan for 10 percent — something that has traditionally been called a piggyback loan or a second mortgage.

The key is to be within the income requirements of the lenders offering this program.

So, don't despair, get out your calculator, see if you qualify, and start looking for your home.

And don't forget to call us for the title insurance!

Read the full report here.
 

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

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Your mortgage - a retirement time bomb?

A wire article from the Washington Post points out that your home mortgage may give you trouble if you do not pay it off before retirement.

How long has it been since you’ve seen one of those mortgage-burning pictures? It was once a big deal, especially with the Greatest Generation.

There was no joy like that last mortgage payment, and our parents prided themselves on burning that paper, hopefully before they retired.

These days, baby boomers increasingly are carrying that debt into retirement.

And while there are pluses to that (the interest rate deduction for some), many financial planners now advise their clients to pay off the mortgage. But they are much more concerned with credit-card, auto-loan and student-loan debt.

The potential problem is that limited retirement income may make it difficult to keep those mortgage payments current post-retirement.


The suggested solution - direct more money now towards your mortgage.  Get a second job, if you have to, and postpone retirement if you can.


Good advice?  I don't know, but as I get closer to that retirement day, it's something I am going to think of.


Read the full article here.


For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, NJ, we are the title insurance agent that does it all for you.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

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Short Sales - Good news for sellers, income tax break extended

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, NJ, we are the title insurance agent that does it all for you.

* * *

Homeowners who had short sales in 2014 can now breathe a giant sigh of relief, as the Mortgage Debt Forgiveness Act was signed into law by President Barack Obama.

Yes, take a deep breath.  When a home being sold is "underwater," that is the amount of the mortgage is greater than the value of the property, the mortgage holder must reduce the amount it is willing to accept in full payment of the mortgage.  The resulting difference between the actual mortgage balance and the amount the lender is willing to accept is called "forgiven debt" and in most circumstance is considered income to the person who received the reduction.  As a result, a seller who "short sells" is home has to recognize that income. 

The newly signed law extends existing protections to short sellers and exempts the forgiven debt from being calculated as income.

You can read more about it here. 

Good luck!

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

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Fake mortgage loan applications on the rise

Fake mortgage loan applications on the rise.

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, NJ, we are the title insurance agent that does it all for you.

* * * * *

One of the reasons behind the mortgage debacle of 2008 was the many false mortgage loan applications lenders and mortgage loan purchasers relied on when approving the loan.  Whether it was for a home purchase or a mortgage refinance, fraudsters couldn't resist bumping up a borrower's income or otherwise flat out lying on the loan application.

 

Despite the warnings, it appears that fake loan apps are on the rise as told in this report from nytimes.com.

 

Falsified applications are now the most common type of mortgage fraud, their incidence having risen steadily for the last three years, according to LexisNexis Risk Solutions’ annual mortgage fraud report.

The report .... breaks down the composition of verified mortgage fraud activity in 2013 as reported by lenders, insurers and other subscribers to a LexisNexis database known as MIDEX. The database tracks only fraud involving industry professionals, such as loan officers, real estate agents and appraisers.

“Eighty percent of all mortgage fraud involves a professional,” said Tim Coyle, the company’s senior director of financial services and an author of the report. “It almost has to — it’s a very complex game.”

Credit fraud, such as undisclosed debt on a credit history or misrepresentation on the credit report, had a big jump in incidents since 2012 but appraisal fraud is down to 15%, a 5-year low.

 

Read the full report here. 

 

Good luck to us all.

 

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

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I am refinancing my mortgage. Do I need a new title insurance policy?

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, NJ, we are the title insurance agent that does it all for you. Call us for a title insurance rate quote or check our website, www.vested.com.

* * * *

Why do I have to buy title insurance again when I refinance my mortgage?  After all, I bought a policy when I bought my home and  there is no change in ownership?

The new lender gets a new loan policy to insure the validity of your new mortgage.

For as long as you own the property, your Owner's policy is valid, but it doesn't insure the new mortgage created when you refinance, and it doesn't provide protection against events that may have transpired between the time you purchased the property and when it is refinanced.

For example, you may have taken out a second mortgage on the home that could threaten the priority of the new lender's mortgage. Or, there could be money  judgments against you or a construction lien claim against the property.

In New Jersey, mortgage refinances are insured at a steeply discounted premium.  If you would like a title insurance premium quote for your refinance mortgage or home equity mortgage, call us, or go to our website, www.vested.com.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

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Adjustable rate mortgage, is it right for you?

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. Even if you just want a title insurance rate quote. We can help. Located in Fairfield, NJ, we are the title insurance agent that does it all for you.

***

 

Ziggy cartoon pokes fun at adjustable rate mortgages (ARM.)

 

 

As the cartoon implies, an ARM customarily has payments that change with changes in the interest rate.

 

When first introduced about 30 years ago, no one knew quite what to make of them.  Even the Federal government was confused and had to come up with an entirely different formula for calculating the annual percentage rate, APR, on such loans.

 

ARMS were touted as cost savers because the initial interest rate was often a teaser rate, below what fixed-rate mortgages were being offered.  That aspect became the biggest target for fixed-rate lenders to aim at, introducing the concept of "rate shock" into the mix by frightening borrowers with the prospect of massive jumps in payments when the ARM mortgage interest rate adjusted.

 

Point of fact, ARMS have never been the bogeyman they were touted to be. There have been abuses in the ARM loan process, namely, writing loans with negative amortization, fixed payments, and the like, but the basic ARM remains a good way for a first-time homebuyer to get her foot in the door.

 

If you would like to know more about ARMS, read this booklet from the Consumer Finance Protection Board.

 



For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

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Home equity loans are on the way back

OK, so it's true.  The rumors are more than rumors.  Lenders are beginning to make home equity loans.  Why, as this article from the New York Times Real Estate Section points out, values for some properties have increased and along with that increase in value comes an increase in equity.  Get it?  Equity.  But without it, you go no where.

Read the full article to see how the market place is changing - Home Equity Loans Make a Cautious Return

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, NJ, we are the title insurance agent that does it all for you.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

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Paying for Foreclosure Delays

As the New York Times reports, everything comes with a price.  That includes new mortgage loans.  The price is higher fees because of the high foreclosure rate. 

The Federal Housing Finance Agency announced last month that, because the stress in housing markets has eased, it was eliminating the across-the-board adverse-market fee instituted in 2008 to help cover the costs of high rates of delinquencies. The fee, applicable to all mortgages bought by Fannie Mae or Freddie Mac, is 25 basis points, or 0.25 percent of the mortgage loan amount.

Yet, fee remains in effect in New Jersey and New York.

At the end of the day, the fee is supposed to soften the cost of foreclosures (to lenders) by creating more revenue when the loan is booked.  The report, linked below doesn't really offer any solutions to the problem.

The New York Times report is found at Paying for Foreclosure Delays - NYTimes.com and the The Federal Housing Finance Agency is here.

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, NJ, we are the title insurance agent that does it all for you.

For your next title order or

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Stephen M. Flatow, Esq.

Vested Land Services LLC

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Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

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Should You Pass On The Fixed Rate Mortgage?

The answer to the question raised above is, it depends.  While fixed rate loans give you comfort in knowing your loan payment will never change, does it make sense to borrower long term if you plan on being in the home for, say, 5 hears?  Decidedly not and the ARM, the adjustable rate mortgage, may be the loan for you.

Here's an article from  Realty Times that discusses the big pro of borrowing with an ARM for home ownership.

Should You Pass On The Fixed Rate Mortgage?

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, NJ, we are the title insurance agent that does it all for you.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

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Borrowers to face another hurdle in a few months.

As a result of the fall-out from the mortgage implosion, Congress saw fit to step into the fray through the Dodd-Frank Act.  One of its progeny is the creation of a class of mortgage called “qualified mortgage.”  These are loans deemed safe by the government regulators for borrowers.

According to a report in the New York Times,

The mortgage industry is bracing for the coming of “Q.M.,” the new federal rules defining a “qualified mortgage” — or one underwritten to standards deemed safe for consumers. The implementation of Q.M. poses a compliance headache for lenders, though the average borrower is unlikely to notice any difference when the rules take effect in January. The most immediate differences will be felt by borrowers at the higher and lower ends of the income scale.

Among the basic criteria: A Q.M. loan must be fully amortizing with a term no longer than 30 years, and the points and fees paid by the borrower cannot exceed 3 percent of the total loan amount.

Lenders must also document the borrower’s ability to repay the loan, and confirm a debt-to-income ratio of no more than 43 percent.

So, what does this mean for Mr. and Mrs. Borrower?  In our opinion, tighter controls on borrowers as to income, etc.  In other words, lenders will be afraid to lend money to folks looking to move into their first home that doesn't qualify for some sort of first-time homeowner program, or folks trying to move up in home size.

What we find puzzling is that the Federal government offices overseeing mortgage and bank lending are just getting bigger and bigger, and less people are able to borrow.

Read the full story.

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, NJ, we are the title insurance agent that does it all for you.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

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Good credit helps when you apply for a mortgage

With a Zen-like statement, the NY Times begins a report on mortgage lending:

Lending terms are easing up for borrowers who have superior credit. But mortgages are no easier to come by for applicants with unexceptional FICO scores.

So, what does that mean?

Samples of FICO scores indicate more loans are being approved with lower scores.  At the same time, down payment amounts are dropping. 

Yet,

Borrowers with scores below 620 — about 28 percent of Americans, Zillow says — couldn’t even get a rate quote. “If you look at the borrowers on the fringe,” said Erin Lantz, Zillow’s director of mortgages, “credit is not any easier to get now than it was three years ago. Despite the improvement in the economy and homes being incredibly affordable and mortgage rates at all-time lows, still about a third of Americans are shut out of the market.”

Read the full article Rewarding Stellar Credit.

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, NJ, we are the title insurance agent that does it all for you.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

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Taking over or assuming an existing mortgage

Back when I began to practice law in the 1970s it was quite common for buyers to assume an existing mortgage rather than apply for a new one.  Believe it or not, there are still some loan programs that allow a buyer to still do that.

This article from the Times, Taking Over a Seller’s Loan, addresses the possibility of taking over an existing mortgage in limited cases, primarily with the FHA or VA has insured the loan or it’s an adjustable rate mortgage.

Homeowners with a mortgage insured by the Federal Housing Administration or the Department of Veterans Affairs should consider using their loan terms as a marketing tool when it comes time to sell.

Mortgage loans from both government agencies include a little-known feature known as assumability. In other words, the buyer of a home financed with an existing F.H.A. or V.A. loan may be able to take over, or assume, the seller’s loan, under the same terms, rather than take out a new mortgage.

“You could now have a seller saying, ‘I have a great house to sell you and a great mortgage to go with it, which is better than my neighbor, who only has a great house,’ ” said Marc Israel, an executive vice president of Kensington Vanguard National Land Services and a real estate lawyer. “It’s a very clever idea.”

So what’s the catch? In a rising market, the buyer needs more cash to put down.

When a house sold back in the 70s for $28,000 and had a $25,000 mortgage, the need for cash was $3,000.  But when prices run up by the 10s of thousands of dollars, well, you get my point.

Read the full article.

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, NJ, we are the title insurance agent that does it all for you.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

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A larger down payment does help you get that house

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, NJ, we are the title insurance agent that does it all for you.
* * * * * *
As this story demonstrates, the credit crunch is not over.  Fact of the matter is that buyer's with larger down payments have a better chance of getting their mortgage approved.

This is from Realty Times:

Take reports of lenders easing the credit squeeze with a pinch of salt.

It still holds true that the larger the down payment, the more likely you are to get a mortgage and at the lowest rate.

LendingTree recently released a study analyzing down payments for borrowers in each state and found overall, nationwide, the average down payment is down 9.4 percent since 2011.

Rather than lenders actually requiring less down, some of the decrease could be due to fewer investors coming to market with larger down payments, if not all cash.

Unfortunately the down payment remains among the greatest obstacles to buying a home, so get with it.

Read more at Down Payment Remains Top Obstacle for Home Buyers

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

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Mortgage loans for the retired

Another issue comes to the forefront when it comes to getting a mortgage loan, that is the particular problems faced by borrowers who are retired.

Retirees trying to obtain a mortgage may find that a pristine credit history and healthy retirement accounts are not enough. Lenders are also looking for a consistent monthly income in line with their usual debt-to-income standards.

There are a couple of horror stories in this article from the NY Times.  Read it here.

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. We are the title insurance agent that does it all for you.  We cover all of New Jersey

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

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Financing a vacation home, banks will make it harder to get that mortgage

The NY Times reports on Financing a Vacation Home.  The quick conclusion -

Buying a vacation home these days requires plenty of cash on hand.

Mortgage down payment requirements are considerably stiffer than for primary residences, and lenders are scrutinizing income more closely, which can make financing especially difficult for the self-employed.

And we just don't mean looking at the amount of money you have.  There are many other factors to consider.  To find out what they are, read the full article.

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. We are the title insurance agent that does it all for you.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

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Need a mortgage? You need a home appraisal

While the New York Times article mentioned here is written with New York City it mind, this column about the home appraisal process is applicable to New Jersey homes, too.

BEFORE anyone can buy a house with a loan from a bank or refinance a mortgage, the lender needs an objective assessment of the property’s value — after all, the home is the bank’s collateral for the loan. Assessing the value is the job of the appraiser.

No mortgage is made without an appraisal.  In my experience the way an appraisal is made has run the gamut from a "drive-by" where the appraiser takes photos from outside the home and gets her information about similar homes (called "comparables" or "comps") from sales reports to the true appraisal where the appraiser physically inspects the home to count and measure rooms, gets a copy of the survey, interviews the homeowner, visits the municipal building department to determine if all improvements have been reported to the municipality and performs a thorough comparison between the subject property and its comparables.

The best thing a homeowner or broker can do to help the appraisal process is to prepare a one-page sheet for the appraiser that outlines the changes and repairs that the home has undergone since it was bought.

Read the full column.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

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