The Top Questions for: Title Insurance, Loans/Lending, Inspections & Contracts
Top 10 - Title Insurance Question & Answers by: Independence Title & Gina Whitsel 512-255-9593
1. What is title insurance? “A title insurance policy protects the future of your real estate investment(s). We start by researching the full history of property as completely as possible through public records ..” “A title policy premium is designed to protect owners and their investment against certain future claims.” “Through the years, a property may change hands many times through sale, inheritance, marriage, divorce, foreclosure or bankruptcy. Each transfer is an opportunity for an error in title to arise, which could affect whether the buyer(s) have full ownership of the property.” Independence Title (Ref: We’re Glad You Asked… Independence Title Brochure)
2. What is a Title Commitment? “In general, a title commitment is a commitment by the title company to insure the property and issue a title policy if conditions in the commitment are met.” Ref: Title Commitments from A to D… Independence Title Brochure
3. What are acceptable closing funds? Cashier’s Check or Wire Transfer
4. Does a T-47 Affidavit need to be submitted with an existing survey? Yes, as per the contract, Paragraph 6, C, 1.
5. Is a survey needed on a Cash transaction? Title does not require a new or existing survey unless:
It’s negotiated in the contract that an existing survey & T-47 Affidavit is to be provided or a new survey is to be ordered.
If the Buyer wants the survey endorsements to their Owners Policy, then the title company must be provided with an existing survey or a new one. The title company cannot issue those endorsements without having reviewed/approved a survey.
A good legal description needs to be established for insuring purposes.
6. Who’s responsible for paying the HOA Resale Fee? As per the contract and/or HOA addendum.
7. When is the HOA Resale Certificate paid? Depends on who the HOA managing company is and if they require
the fee to be paid upfront or at the time of closing. 9 times out of 10, it’s required upfront.
8. Seller and/or Buyer is an Entity, i.e. Trust, Corporation, LLC or LP: Why does the title company require to see the Entity Documents? The title company needs to determine who has the authority to sign on behalf of the entity and in what capacity they can sign. i.e. Trustee, Co-Trustee, President, Managing Member, etc.
9. As a Buyer, does my spouse have to sign documents? Yes, If the property is going to be designated as homestead property and/or if the lender requires them to sign the Deed of Trust to perfect their lien. As a Seller, does my spouse have to sign documents? If the property is designated as your current homestead, Yes, your spouse will need to deed out their interest. If the property is designated as investment property, then the title company will require your spouse to sign a Non- Homestead Affidavit.
10. Can a Power of Attorney (POA) be used if the Principal is deceased? No, because when utilizing a POA, the title company must ratify the POA, meaning they have to contact the Principal to verify they are “Alive and Well” and not revoking any of their powers.
Top Questions Regarding Loans: By Guild Mortgage & Carson Vaughn 512-794-6797
1. Are there any first time home buyer incentives? Yes, there are various low to no down payment options available to first time buyers. There are bond programs offered through TSAHC, TDHCA and SETH Goldstar offer assistance most commonly in an amount of 3-5% of the purchase price towards the down payment and closing costs for a home purchase. There are income and credit score restrictions. In some cases the assistance is forgiven over time and in other cases it is repaid once the home is sold or refinanced. Contact me for additional details
Guild mortgage also has a 3% down payment program where Guild offers a $2000 Gift Card to The Home Depot and $1500 towards closing costs for qualified first time homebuyers. Details can be found at:
2. If I have already owned a home in the past, can I still be considered a first time buyer? Yes, to be a first time buyer, you bust not have owned a home in the last 3 years
Top Questions about Home Inspections: by Joey O'Brien Inspect-IT-Austin 512-657-3460
1. In reference to new construction: Why does my concrete or slab have major cracking? This is a very common occurrence especially in fast curing concretes. They are called moisture or hydration cracks. They are from the concrete curing process that can take place up to several years after moving into your home. In short, this is very common to see.
2. How long will my A/C last? This is a very good question and it can vary depending on care and maintenance. Generally, The standard life span of an HVAC is anywhere from 15-20 years. As with all things, maintaining and properly servicing your system will help prolong its life. All this being said, I can’t tell you how many homes I have inspected that are built in the 70s and 80s and their HVAC units are running strong. The morale of the story is, 15-20 years is your normal life span but make sure you are serving your equipment yearly.
3. How much more life does the roof have? This question is another interesting one because of its many factors. In Texas, due to our ever changing weather conditions a 25 year composite shingle roof really means 17-20 years. Praying there were no hail storms, of course! Don’t forget, roofs just like other components of the home need periodic maintenance. Such as cleaning out gutters, sealing all roofing fasteners, plumbing and air vents, and all flashing points (with an approved roofing mastic). Also, keep tree limbs and vegetation cut back a minimum of 3 feet.
4. In homes that utilize septic systems I often get asked: How frequently should the system get pumped? Depending on your system, this can vary. A general rule of thumb is every 3-5 years. However, that time frame is of course, if you are following proper septic etiquette. This means no grease, feminine products, non-biodegradable material should be flushed down the drains.
5. Would you buy this house? This is probably the most asked question I get. This is how I reply every time: There are no bad houses, but there are bad prices. That’s why you should always have representation when purchasing real estate. An experienced real estate professional will help you research important factors that determine the price for the property you might invest in. These items can include, property location, age of home and work needed or work that as been done. In addition, any previous claims that may have been filed on the property.
Top Questions about Residential Contracts: by Grant Dean Broker 512-433-9624
1. What is Earnest Money? Earnest money is a good faith deposit the buyer deposits with the title company once the contract has been executed. The amount will range and is negotiable, many times you’ll see a minimum of 1% of the sales price. However, a buyer may wish to deposit a large amount of money to convey to the seller they really want the property.
2. What is Option Money? In Texas buyers have the choice to pay the seller for the right or option to withdraw from the contract for ANY reason within a set number of days after going under contract. The amount of the option money and the number of days is negotiable. It is not unlikely for a buyer to pay $200-500 for 3-10 days of Option. Having fewer days of Option in combination with a higher amount conveys a strong message to the seller that the buyer is serious about the property.
3. What does it mean when I hear about “Months of Inventory”? If you hear that we have 4 months of inventory for example that means that if nothing else was listed for sale it would take 4 months to sell all the current listed properties/inventory.
4. How does months of inventory effect buying or selling a home? A balanced market, meaning neither the buyer nor the seller has the upper hand is generally 6 months of inventory. Several years ago, during the recession we had up to 8 or 9 months of inventory and it was termed a Buyer’s Market. There were a lot of homes for sale/competition and sellers were more willing to negotiate and give concessions to get their house sold. Austin and surrounding cities like Round Rock, are currently in a Seller’s Market, meaning there is less than 6 months of inventory. In some areas or neighborhoods there is only 1-2 months of inventory. This generally means that sellers have the advantage and do not have to be as accommodating to buyers request on terms. However, sellers cannot get lazy, they still must put forth a solid and polished product to sell to net the most money possible. Talk to your broker and ask about how the home is priced that you want to buy based on the comparable/comps in that specific neighborhood before deciding what to offer.
5. Do I need to get pre-qualified for a loan before I start to look at homes or property to buy? YES! Knowing the financial pieces of the home buying process is critical to make sure you can get what you want and have enough money to do so. DO NOT start to view homes until you have talked with a lender/bank and they have issued you a pre-qualification or pre-approval letter.
6. Does it matter who I use to get a loan? YES! In my experience working with a local lender will dramatically improve the home buying experience and give you the best chance of closing on the property/home you want to buy. It has been my experience that the bigger the bank the bigger the problems with communication, meeting deadlines, understanding local contracts and closing on the date set in the contract.