In this 3 part series, join Janet Allen and Scott Rooker as they discuss what you need to look out for when you are buying or selling a home equipt with smart technology.
Helpful Terms for Buying/Selling Your Home
Buying or selling a home is one of the most important undertakings of a lifetime. When buying or selling a home, there are many real estate terms that may be unfamiliar to you. Check out this list of commonly used terms that you may find helpful during the process.
AIR: Adjustable Interest Rate
AMORTIZATION SCHEDULE: A schedule showing the principal and interest payments throughout the life of the loan.
APPRAISED VALUE: An opinion of the value of a property at a given time, based on facts regarding the location, improvements, etc. of the property and surroundings.
CD/CLOSING DISCLOSURE: This form is a statement of final loan terms and closing costs. Sometimes referred to as ICD or Integrated Closing Disclosure.
COMMITMENT: The document by which a title insurer discloses to all parties connected with a particular real estate transaction all the liens, defects, and burdens and obligations that affect the subject property.
CREDIT REPORT: A report on the past ability of a loan applicant to pay installment payments.
DOCUMENT PREPARATION FEE: A charge by an attorney for preparing legal documents for transaction.
ESCROW FEE: A fee charged by the title company to service the transaction, to escrow monies, and cover documents. Usually split between buyer and seller.
ESCROW ACCOUNT: Funds held by the lender for payment of taxes and insurance when due. Usually does not include maintenance fees.
HOA ASSESSMENT FEES: Charged by the homeowner’s association as set out in subdivision restrictions.
HOMEOWNER’S INSURANCE: Protects the property and contents in case of loss; must be for at least the loan amount or for 80% of the value of the improvements, whichever is greater.
INSPECTIONS: An examination of property for various reasons such as termite inspections; to see if required repairs need to be made before funds are received, etc.
INTEREST: Money paid regularly at a particular rate for the use of money lent.
LOAN TITLE POLICY: Required by the lender to insure that the lender has a valid lien; does not protect the buyer.
ORIGINATION FEE: A fee the buyer pays the lender to originate a new loan.
OWNER’S TITLE POLICY: Insures that the buyer has title to the property, that there are no other claims as to ownership. Among other matters, it also insures access to the property, the right to occupy the property, good and indefeasible title, and that there are not other types of specific liens against the property.
POINT: 1% of the loan amount.
PREPAIDS: Items to be paid by the buyer in advance of the first scheduled payment of the loan (Homeowner’s Insurance Premium, Mortgage Insurance Premium, Prepaid Interest, Property Taxes and a maximum of three additional items).
PREPAYMENT PENALTY: Charged by the lender for premature payment of a loan balance.
PRIVATE MORTGAGE INSURANCE: Insurance against a loss by a lender (mortgagee) in the event of default by a borrower (mortgagor).
REALTOR FEES: An amount paid to the REALTOR® as compensation for their services. RECORDING FEES: Charged by the County Clerk to record documents in the public records. RESPA: Real Estate Settlement Procedures Act.
RESTRICTIONS: Certain limitations or conditions related to the future use of the property put on the property by a prior owner. These restrictions stay with the property until they expire or are amended as per certain procedures set forth in the restrictions.
SURVEY: Confirms lot size and any encroachments or restriction violations.
TAX CERTIFICATES: Certificates issued by taxing authorities showing the current year’s taxes, the last year the taxes were paid, and any delinquencies to be collected at closing.
TAX PRORATION: Means that the payment of the taxes for the year of sale are divided between the Buyer and Seller, usually based on the amount of time the Seller owned the property during that year. Prorations, and how they are calculated, are typically addressed in the Contract of Sale.
TIL: Truth in Lending.
TIP: Total Interest Percentage; the total amount of interest the borrower will pay over the loan term as a percentage of the loan amount.
TOTAL OF PAYMENTS: Total amount paid after all payments of principal, interest, mortgage insurance and loan costs are scheduled.
To download our Helpful Terms for Buying/Selling Your Home flyer, visit Helpful Terms for Buying and Selling Your Home.
Title Insurance Rate Change Effective September 1, 2019 – Reminder
Please note that beginning September 1, 2019, there will be a change to the basic premium rate for title insurance including an overall adjustment of -4.9 percent.
The Texas Commissioner of Insurance has issued an order adjusting the basic premium rate for title insurance and amending R-5, R-8 and R-20.
Summary of Changes
Basic Premium Rate – Includes an overall rate adjustment of -4.9 percent, a starting base rate of $25,000 and three new rate tiers for policies with face values over $25, $50 and $100 million.
Refinance Rate Amendment – Amends Rate Rule R-8 to provide for a 50 percent credit within the first four years and a 25 percent credit between four and eight years.
Simultaneous Issue Discount Expansion in R-5 – Allows a simultaneous issue rate credit for 90 days on transactions $5 million and above. The premium is $100 for each loan policy under these circumstances.
Construction Credit Expansion in R-20 – An extension of the credit for developers of large construction projects from one year to two years with a simultaneous issue rate for the loan policy.
These new rates will go into effect on all transactions that close (the date the papers are signed) starting on September 1, 2019.
Read the Order and View the Amendments
These changes are outlined in TDI’s adoption order. The revised rate chart and amended rules can be found in the following exhibits:
- Exhibit A – Basic Premium Rates; Calculation for Policies in Excess of $100,000 with Examples
- Exhibit B – (R-5) Simultaneous Issuance of Owner’s and Loan Policies
- Exhibit C – (R-8) Loan Policy on a Loan to Take Up, Renew, Extend, or Satisfy an Existing Lien(s)
- Exhibit D – (R-20) Owner’s Policy After Construction Period
Republic Title Online Resources
Please visit our website for additional online resources including:
- Estimated Closing Cost Calculator
- Texas Title Insurance Rate Card (effective beginning 9/1/19)
- Republic Title Locations
As always, please feel free to contact your escrow officer if you have any questions about the new rates. If you would like printed rate cards or need help using our online calculator, please contact one of business development representatives.
After Closing Reminders For Sellers
Your house has sold and the deal is closed. Now what do you do?
Here are some reminders for you as the seller:
- Cancel your homeowners insurance with your insurance agent once the transaction has closed, funded and your personal items have been removed from the home. There may be a prorated refund of your homeowner’s policy, based on the latest renewal date, owed to you. If you are remaining at the property after closing, you should notify your insurance agent of this change.
- Cancel your auto deduction for your house payment with your current lender if applicable.
- Your lender will refund all monies left in your escrow account approximately 15 to 30 business days after receipt of the payoff funds. The lender will mail a package containing your original Promissory Note marked “PAID” and the other loan file documents. Retain these for future reference. When you receive this confirmation, you may also receive a “Release of Lien” or “Reconveyance of Lien” from your lender. If the release does not appear to have been recorded with the County Clerk’s office, please forward it to your closer at the title company. We have collected for the recording of the document at closing and will send it to the County to be filed, thereby releasing the lien of record.
- Depending on what time of the year you sold your property, the Taxing Appraisal District may not have updated the account to show a change in ownership. If you receive a Tax Bill for the property that you sold, refer to your closing statement and send the bill to the new owners.
- You will receive a Substitute Form 1099-S from Republic Title within 30 days of closing. In addition, retain your closing statement, it serves as a Substitute Form 1099-S for tax purposes.
We hope these tips have been helpful to you in answering any post closing questions you may have had. As always, please do not hesitate to contact your closer should you have any questions. Thank you for allowing us to be a part of this transaction.
Click here for printable version.
Updated Seller’s Disclosure Notice Effective September 1st
The Texas Real Estate Commission has released an updated Seller’s Disclosure Notice for mandatory use Sept. 1.
It’s available for voluntary use immediately.
As of Sept. 1, 2019, the new Seller’s Disclosure Notice has questions in paragraphs 6, 7 and 8 relative to floodplains, and includes definitions of the various categories according to FEMA. In addition, questions about previous claims for flood damage or assistance from FEMA or SBA are also included.
The notice must also disclose a seller’s knowledge of water damage not due to a flood event and requires a seller to disclose whether a prior flood-related insurance claim was filed with an insurance provider or the seller received aid from FEMA.
Click here for the red-lined seller’s disclosure notice and click here for the blank seller’s disclosure notice.
Effective September 1, 2019: Texas Title Rate and Rule Revisions
Please note that beginning September 1, 2019, there will be a change to the basic premium rate for title insurance including an overall adjustment of -4.9 percent.
The Texas Commissioner of Insurance has issued an order adjusting the basic premium rate for title insurance and amending R-5, R-8 and R-20.
Summary of Changes
Basic Premium Rate – Includes an overall rate adjustment of -4.9 percent, a starting base rate of $25,000 and three new rate tiers for policies with face values over $25, $50 and $100 million.
Refinance Rate Amendment – Amends Rate Rule R-8 to provide for a 50 percent credit within the first four years and a 25 percent credit between four and eight years.
Simultaneous Issue Discount Expansion in R-5 – Allows a simultaneous issue rate credit for 90 days on transactions $5 million and above. The premium is $100 for each loan policy under these circumstances.
Construction Credit Expansion in R-20 – An extension of the credit for developers of large construction projects from one year to two years with a simultaneous issue rate for the loan policy.
These new rates will go into effect on all transactions that close (the date the papers are signed) starting on September 1, 2019.
Read the Order and View the Amendments
These changes are outlined in TDI’s adoption order. The revised rate chart and amended rules can be found in the following exhibits:
- Exhibit A – Basic Premium Rates; Calculation for Policies in Excess of $100,000 with Examples
- Exhibit B – (R-5) Simultaneous Issuance of Owner’s and Loan Policies
- Exhibit C – (R-8) Loan Policy on a Loan to Take Up, Renew, Extend, or Satisfy an Existing Lien(s)
- Exhibit D – (R-20) Owner’s Policy After Construction Period
Republic Title Online Resources
Please visit our website for additional online resources including:
- Estimated Closing Cost Calculator
- Texas Title Insurance Rate Card (effective beginning 9/1/19)
- Republic Title Locations
As always, please feel free to contact your escrow officer if you have any questions about the new rates. If you would like printed rate cards or need help using our online calculator, please contact one of business development representatives.
What Is Title Insurance?
Two types of Title Insurance
There are two basic types of title insurance:
• Loan Title Policy
• Owner’s Protection
Most financial lenders require a Loan Title Policy as security for their investment in your property, just as they require homeowners or other types of coverage for their protection. Title insurance gives the Lender assurance that there are no other claims to the property and that their lien is secure.
Owner’s title insurance lets the new home owner feel safe and confident there are no other claims as to the ownership of the insured property. Among other matters it insures access to the property, gives the homeowner the right to occupy the property, provides good and indefeasible title which shows there are no specific liens against the property. The policy is purchased at the closing and lasts as long as you have an interest in the insured property.
What does your Premium Cover?
Title insuring begins with a search of public land records affecting the real estate concerned. An examination is conducted by the title agent on behalf of its underwriter to determine whether the property is insurable. We have a highly qualified team of abstractors and examiners that review your property to be sure you have clean and clear title to your new home. Some of the items they review are:
• They review prior owner’s wills and deeds to be sure the wording and names are correct.
• They look to make sure all outstanding mortgages and/or judgments are released or will be released at closing.
• They check on liens against the property because the seller has not paid his/her taxes.
• They search to be sure there are no lawsuits or legal action that would affect the property.
• They examine the records to be sure and make note of any easements and utility lines that will cause any issues.
Protecting your Investment
Title insurance is not as commonly understood as other types of insurance. However, it is just as important. When you purchase a home, in addition to purchasing the actual land or building structure, you are actually purchasing the title to that property as well as the rights to occupy and use the space. Having an Owner’s Title Policy insures and protects claims asserted by others on your property.
Other types of insurance that protect your home may focus on possible future events and charge an annual premium. Owner’s Title Insurance is a one-time purchase and following a careful examination and research of past ownership of your property, it protects you on claims or issues on your property before you were the owner.
Your home is probably your most important investment. Before closing on your home, inquire about your title insurance protection. Be sure to protect your asset with an Owner’s Title Policy.
What is Title Insurance?
Explaining title insurance to your buyer clients can be difficult and confusing to say the least. We hope this short video on what title insurance is will help you and your clients better understand the importance of protecting your home with title insurance coverage.
The New Earnest Money Delivery Date Sample Timeline
FROM THE CONTRACT:
“IF THE LAST DAY TO DELIVER THE EARNEST MONEY FALLS ON A SATURDAY, SUNDAY, OR LEGAL HOLIDAY, THE TIME TO DELIVER THE EARNEST MONEY IS EXTENDED UNTIL THE END OF THE NEXT DAY THAT IS NOT A SATURDAY, SUNDAY, OR LEGAL HOLIDAY.”
IMPORTANT TIPS:
– EARNEST MONEY CANNOT BE DELIVERED ON A SATURDAY, SUNDAY OR LEGAL HOLIDAY. HOWEVER, YOU DO COUNT SATURDAY, SUNDAY AND LEGAL HOLIDAYS AS EFFECTIVE DAYS WHEN COUNTING THE THREE DAYS, BUT NOT AS THE DELIVERY DATE. THE DELIVERY DATE IS THE NEXT BUSINESS DAY.
– WHILE EARNEST MONEY IS NOT
REQUIRED TO BE DELIVERED UNTIL THE 3RD DAY, IT IS RECOMMENDED TO DELIVER THE CHECK DURING BUSINESS HOURS TO OBTAIN A RECEIPT OF EARNEST MONEY FOR THE DELIVERY.
Click here for printable version.