More Real Estate Tips
Buying real estate in these tough times can seem like a daunting task, seeing how the housing bubble burst in the last 2 years. Still, investors are showing prominent interest in investing in prime property due to the lowest rates in the past 10 years. If you're buying property at this time, a little technical knowledge would help you to sort out what your agent is actually saying (or not saying)
TITLE INSURANCE-
Simply put the title insurance is a fail-safe to prevent any loss arising from contesting claims on your title to the property. Getting title insurance may not be a bad idea and in some cases maybe necessary as the lender demands it to secure the mortgage costs.
Don't depend on lender policies to save you since they're geared towards the lender, instead buy the owner's title policy as well, or some sellers will but it for you as part of a good deal.
The insurance will cover all costs arising due to claims that were made before the policy is signed. So if you forfeit on your payment to your contractor for say, remodelling your kitchen and he places a lien on your home, you can't claim title insurance. But the person who will own the property after you (in event of non-disclosure of unpaid lien) will be protected by the title insurance.
For more information on title insurances, check out: http://www.mtgprofessor.com/title_insurance.htm. For info on cheap home insurance, check http://www.homeinsurance.org.
ESCROW ACCOUNTS-
Escrow/impound accounts are setup by your lenders to pay any property taxes/local taxes. Escrow accounts are usually setup in cases where less than 20% of the costs have been made in down payment. Loans with an escrow account are considered to be much safer and are generally favoured by lenders, with some lenders paying you to make an escrow account.
Escrow accounts won't hurt to build, since they are mighty helpful at preventing a blow which your end-of-year tax assessment can bring and aid you in continuously paying your property taxes with the help of your lender. They offer you peace of mind that your taxes are being paid regularly, on time.
For more information on escrow accounts, check out: http://realtytimes.com/rtpages/20010118_escrow.htm
THE APPRAISAL-
Even after you've taken worked out all the details and made the purchase offer, it's the property appraisal that can make or break the deal and determine, if you get the house or not. Appraisals are carried out by a licensed real estate appraiser who is generally hired by the Lender.
The appraiser uses a complex set of criteria's to determine the market value of your property against the price at which it was bought. If the market value is lower than the deal price, then you could have a problem in obtaining a suitable loan. The bank could still loan you a percentage of the money but the rest of the balance has to be paid off by you.
In case the appraisal doesn't work to your favor, you can always look at other properties and wait till the purchase contract expires. If the property did not appraise to the purchase price then your money should be returned.
If the appraisal does carry through smoothly you can finalise the deal and secure the contract