Title Insurance and Why You Need It: Guest Blog by Matt Chance, Esq.

Matt has been my go-to title and real estate law expert for some time now.  When asked if he would offer some advice to homeowners, he was more than happy to share his expertise.  Read on to find out why title insurance is so very important.

Scott Shenton

 

Title Insurance and Why You Need It: by Matt Chance Esq.

It is easy to find Internet sites and blogs that claim title insurance is not necessary in purchase transactions.  Be wary of any site or person advising you to not purchase title insurance during your transaction.  Title Insurance provides protection for your single largest investment, and to ensure your ownership rights in your home are protected.

What is Title Insurance?

During the beginning parts of a Real Estate Transaction the Settlement and Escrow company perform an exhaustive title search that makes sure each transaction in the chain of title has been properly recorded and that each transfer of ownership was proper.  Title Insurance is an insurance product that covers a wide array of undiscoverable defects in the title and will serve to correct those defects for the benefit of the insurance holder.  There are two types of title insurance, Lender’s Title Insurance and Owner’s Title Insurance.  Lender’s Title Insurance protects the lender’s interest in the property in the case of foreclosure.  Lender’s title insurance will not protect the owner under any circumstances.  Generally Lender’s require that borrower’s purchase the Lender’s Title Insurance as a condition of the loan.  Owner’s Title Insurance covers the purchaser of the home against a wide array of issues that will be discussed further below.  Attorney’s can be very expensive and certain issues are extremely time consuming to resolve, title insurance will save the time, hassle, and expense of correcting these issues.

Common Defects and Areas of Coverage

Clerical errors in the courts happen at times and they can lead to misplaced judgments, liens, boundary line disputes, deed issues and other items that can affect title to a property.  Owner’s title insurance will pay for an attorney to file the necessary paperwork to correct any clerical errors and fix the issues they caused for the owner.

Unknown Liens can be placed on a property even after closing.  This is a particular concern for any distressed properties in short sale or foreclosure.  These types of liens are undiscoverable during the process of a title search but Title Insurance will remedy any unknown lien.

Illegal Deeds can be recorded on purpose or by accident.  There is a litany of laws dealing with the legal requirement of Deeds and it is easy to make a mistake.  Deeds in past recordings may have been executed by someone under the age of 18, by a person of unsound minor, by someone who claimed to be single but was married.  A Power of Attorney may not have been recorded along with a Deed or some other Deed error may have occurred.  A Deed signature may have been forged or some other illegal act may have occurred.  Title Insurance will remedy these issues at no cost to the buyer.

Missing or Undiscovered Heirs can arise after a death in the family that have a legitimate claim to real property.  It is impossible to know if a missing heir will arise after settlement, title insurance will cover the costs associated with making sure property rights remain vested with the buyer.

Unknown Easements and Undiscovered Encumbrances can be claimed after a settlement.  Easements and encumbrances can inhibit how you can use your property.  An easement or encumbrance may prohibit the buyer from putting-up a fence or erecting a shed.  Title Insurance will remedy these potential issues for the benefit of the buyer.

Why Do I Need Insurance?

If the Settlement Company performs their duties fully then why does a Buyer need to purchase insurance of these issues?  As you can see above many of the issues that are covered by title insurance are not discoverable at the time of closing.  It is imperative to protect against these potential defects that arise after settlement occurs.  Title insurance is a one-time expense that covers your investment from the day of settlement back in time to ensure that the property you have saved to buy remains usable in the way you envisioned.

Title Insurance is complicated and offers standard and enhanced policies.  The settlement company should provide you with a quote on standard policies and enhanced policies, and explain the difference in coverage to you.  Finding a Settlement Company that will take the time to educate you on coverage’s and the settlement process is an imperative part of the purchase transaction and a part not to be overlooked.  Be sure your title company is able and willing to take the time to help you make an educated decision.

Matthew Chance, Esq.

Community Title Services, Inc.

Principal Attorney, President of Sales and Marketing

7470 New Technology Way, Suite P

Frederick, MD 21703

(O) 240-415-6290

(C) 240-394-0728

Rate-Shopper’s Report: May 1st 2017

Monday, May 1, 2017

What’s going on and why does it matter?
A new month of trading begins today! As usual, this first week of the month ushers in a full economic calendar. We have this morning’s personal income and inflation numbers, which came out weaker than market expectations. The Fed’s interest rate decision and monetary policy statement are due out on Wednesday. At this point, the market is anticipating that the Fed will hike rates in June instead of May; but the market will be watching the Fed’s statement and Fed Chair Yellen’s press conference for clarification as to when the Fed may stop or slow down its mortgage bond buying program.  We also have the highly anticipated non-farm payrolls report which is scheduled to be released on Friday.

In the meantime, mortgage bonds are continuing to drift sideways in a trading range between their 10-day and 30-day moving averages. The Fed’s mortgage bond buying activity today is limited to $525 million of 15-year conventional mortgages. It may be a quiet day for mortgage bond trading today because most of the financial markets in Europe and Asia are closed for the May Day holiday.  Also, many mortgage bond traders here in the US are attending the Mortgage Bankers Association’s annual Secondary Market Conference in New York, which is taking place today and tomorrow.

What should you do about it?
Watch for mortgage bond prices to remain above their 30-day moving average, but be prepared to lock quickly if bonds break below that level.

Rate-Shopper’s Report for April 24th

Monday, April 24, 2017 What’s going on and why does it matter? Mortgage bonds opened lower this morning amidst a sell-off in the global bond market. The results of the first round of the French Presidential elections came in, and barring a surprise in the run-off election on May 7, it appears that Emmanuel Macron is likely to win the French Presidency. This means that a crisis in the European Union economic structure is likely averted because Macron is seen as a centrist and euro-friendly candidate. Stock markets are breathing a sigh of relief, while bond prices are giving back some of their recent gains as investors unwind their “flight to quality” trades.  It will be interesting to see if mortgage bond prices can hold above their 30-day and 100-day moving averages.  The Fed is scheduled to purchase up to $2.05 billion of 30-year and 15-year conventional mortgage bonds today, so that may help to stabilize bond prices.  There are no major economic reports scheduled for release today, but the economic calendar gets bu sier later in the week. What should you do about it? Lock your rate to be safe. ….. ….. Economic reports that may impact mortgage rates this week: Date Report Period Prior Estimate Actual Tue 25 Apr Consumer Confidence Apr 125.6 122.9   Tue 25 Apr New Home Sales Mar 590,000 590,000   Thu 27 Apr Durable Goods Mar 1.7% 1.2%   Thu 27 Apr Initial Jobless Claims Week of Apr 17 244,000 242,000   Thu 27 Apr Pending Home Sales Mar 5.5% -1.0%   Fri 28 Apr GDP Q1 2017 1.9% 1.1%   Fri 28 Apr Core PCE Prices Q1 2017 1.3% 2.0%   Fri 28 Apr Chicago PMI Apr 57.7 56.5   Fri 28 Apr U of Mich Consumer Sentiment Apr 96.9 98.0

 

 

 

TAX DEDUCTION VS. TAX CREDIT: Guest Blog by Darrick Bowens

Last year, I had a great pleasure of meeting Darrick Bowens, owner of Frederick’s own Colbert/Ball Tax Service.  Darrick has a no nonsense approach to tax policy and planning that has served his clients as well as his friends very well.  Read below to learn more about Darrick’s take on tax deductions  vs. tax credits.

~Scott Shenton  sshenton@apexhomeloans.com  

Many people fear taxes and view them as a necessary evil. This is probably the least most exciting thing to do but in actuality it should be the most anticipated. Why you ask? Because taxes, unlike other Patriotic duties, is most recognizable. The old saying goes: There are two guarantees in your life time, death and taxes. You want to do all you can to put both off as long as possible.
Today, taxes are killing many people financially. More than most people would ever know. When I do quarterly financial seminars I always end my presentation with the question: What is the largest monthly expense by percentage? Most people respond with your “living expenses” or “mortgage/rent”. They are shocked when I tell them taxes. When I start naming the different ways in which we are taxed I can literally see the light bulb go off in their heads. The average person pays 30 to 50 percent or more of their hard earned income in taxes either through income, sales, utilities, property taxes and the list goes on and on.
“The average person in a developed country spends 25 to 35 percent of their life working to pay taxes. That means more than two hours of every workday is dedicated to supporting your Government. And three to four months out of every year are spent working solely so that you can pay your taxes. That adds up to over 13 years in your work life and 20 years in your lifetime. That’s a prison sentence.”
There are two rules that you should really consider when it comes to taxes:
Tax tip: Always remember credits work better than deductions as refund boasters. Tax credits provide a dollar-for-dollar reduction of your income tax liability. This means that a $1,000 tax credit saves your $1,000 in taxes. Yet roughly 20% of eligible Americans don’t claim the earned income tax credit. You are eligible even if you are single with no kids.
The biggest credits that the average American may qualify for:
 Earned Income Credit
 American Education Opportunity Tax Credit
 Lifetime Learning Credit
 Child and Dependent Care Credit
 Savers Tax Credit (formerly the Retirement Savings Contribution Credit)

Tax tip: On the other hand, tax deductions lower your taxable income and they are equal to the percentage of your marginal tax bracket. This means if you are in the 25% tax bracket, a $1,000 deduction saves you $250 in tax (0.25 x $1,000 = $250).

Common itemized deductions include:
 Certain medical and dental expenses above 10% of your adjusted gross income (7.5% if you are 65 or older)
 State income taxes
 State sales and local tax
 Property taxes
 Charitable contributions
 Mortgage interest

Quote: “Like mothers, taxes can often be misunderstood but seldom forgotten” Lord Bromwell

Although you hear people using these tax terms interchangeably there is a difference. You have heard phrases like “go ahead and deduct it” or “there is a credit for that.” Although you might have heard or even uttered one of the sentences above, have you ever wondered or sought to understand its true meaning? While both tax deductions and tax credits can save you a significant amount of money on your taxes, understand that they work in significantly different ways.

Contrary to popular belief; tax laws are written to reduce your taxes, not to increase them. In the United States there are over 5,800 pages of the tax law but only about 30 pages are devoted to raising taxes. This means that 99.5% of the tax law exists solely for the purpose of saving you money. The bottom line is our government wants you to reduce your taxes.

Author
Darrick L. Bowens
Darrick L. Bowens
Franchise Owner
Colbert/Ball Tax Service
124 West Church Street
Frederick, MD 21701
(301) 378-9219
http://www.colbertballtax-frederick.com

What is a reverse mortgage?

 

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One way for you to potentially improve your cash flow during retirement is to use a home equity conversion mortgage (also known as a “HECM” or “reverse mortgage”).

The HECM is a mortgage loan made by a private lending institution such as a bank, credit union or mortgage company.  The loan is insured by the Federal Housing Administration (FHA), which is a division of the US government.  You are not required to make monthly mortgage payments, and any interest that you owe is simply added to your loan amount.  Here’s how it works:

• Assume you are 62 years old and your home is worth $500,000. You would likely qualify for a loan in the $250,000 range. So you’d still have about $250,000 of equity remaining in the home (see illustration above).  The $250,000 can be used to pay off other debts and eliminate the payments associated with those debts.  Or you could use the funds for any other reason.
• Your home would continue to go up or down in value, taking your equity position right along with it. However, the HECM balance would also be growing over time. So in this example, if the home goes up in value to $600,000, and the HECM balance grows to $350,000, your equity in the home would remain constant at $250,000.  If you use the line of credit version of the HECM, the credit limit on your line of credit would increase every year.  This would give you immediate access to your home equity at any time that you need it (see illustration below).
• In the worst case scenario, let’s assume the home doesn’t go up in value at all, and the HECM balance continues to grow throughout your lifetime. By the time you sell the home, assume the HECM balance is greater than the value of the property. In this example, the home would only be worth $500,000 and the HECM balance is $600,000, which is $100,000 more than the value of the home. The FHA would eat the loss. That’s the entire reason why the FHA charges mortgage insurance on the loan. The FHA mortgage insurance basically covers you and your estate from a potential negative equity scenario in the future (see illustration below).

The bottom line is that a HECM can be used to improve your cash flow and give you more financial options than you previously thought were available.

PLEASE NOTE: THIS ARTICLE AND OVERVIEW IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL, TAX, OR FINANCIAL ADVICE. PLEASE CONSULT WITH A QUALIFIED TAX AND INVESTMENT ADVISOR FOR SPECIFIC ADVICE PERTAINING TO YOUR SITUATION.

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Scott Shenton
NMLS Number: 1039731
Apex Home Loans Inc.
Corporate NMLS Number: 2884
sshenton@apexhomeloans.com
https://www.apexhomeloans.com/scottshenton
(240) 268-3156
3204 Tower Oaks Blvd. #400
Rockville, Maryland 20852

Apex Home Loans, Inc. NMLS #2884. For more information, please reference the NMLS Consumer Access Website at http://nmlsconsumeraccess.org. Licensed by: DE as a Lender by the Office of the State Bank Commissioner (011603); DC as a Dual Authority Mortgage Lender by the Department of Insurance, Securities and Banking (MLB2884); FL as a Mortgage Lender by the FL Office of Financial Regulation (MLD1088); MD as a Mortgage Lender by the Dept. of Labor, Licensing & Regulation (06-4989); N.J. Department of Banking and Insurance (2884); PA as a Mortgage Lender by the Dept. of Banking & Securities (45078); VA as a Lender and Broker by the State Bank Commissioner (MC1278); and WV as a Mortgage Lender by the WV Division of Financial Institutions (ML-34657).

Rate-Report for April 10th 2017

Monday, April 10, 2017

What’s going on and why does it matter?
Mortgage bonds opened flat today in continuation of last week’s sideways momentum. Although last Friday’s jobs report was weaker than market expectations, bond investors remain concerned that the Fed may stop or slow down its mortgage bond buying program later this year. The market also seems unsure about the US political climate… the Trump agenda has stalled and Congress is out for the next two weeks on recess. The economic calendar is quiet today, but it picks up later this week. This is a holiday-shortened trading week as the bond market will have a half-day session on Thursday, and it will close on Good Friday. As for today, the Fed is scheduled to purchase up $850 million of GNMA mortgage bonds this morning, and Fed Chair Yellen is scheduled to give a speech later this afternoon.

What should you do about it?
Watch for mortgage bond prices to improve, but be prepared to lock quickly if bond prices break below their 100-day moving average.

 

CLICK HERE FOR THE FULL STORY
Economic Calendar

Economic reports that may impact mortgage rates this week:

Date	Report	Period	Prior	Estimate	Actual
Tue 11 Apr	JOLTS Job Openings	Feb	5.63M	5.66M
Thu 13 Apr	Initial Jobless Claims	Week of Apr 3	234,000	245,000
Thu 13 Apr	PPI final demand	Mar	+0.3%	0.0%
Thu 13 Apr	U of Mich. Consumer Sentiment	Apr	97.6	96.5
Fri 14 Apr	Core CPI	Mar	+0.2%	+0.2%
Fri 14 Apr	Retail Sales	Mar	+0.1%	-0.1%

 

 

 

Rate-Shopper’s Report for March 27th

Market Update

Monday, March 27, 2017

What’s going on and why does it matter?
Financial markets are reversing the “Trump trade,” with stock prices declining and bond prices improving in reaction to the defeat of the healthcare bill on Friday. The failure of the Republican party to unite on the bill is casting doubt on the Trump Administration’s ability to deliver on other growth policies such as tax reform and economic stimulus spending.  Mortgage bond prices are approaching their 100-day moving average for the first time since October, 2016.  It will be interesting to see if they can break above that level or if the 100-day moving average will operate as a technical ceiling of resistance. The Fed’s mortgage bond buying activity today is limited to $1.125 billion in GNMA mortgage bonds. The economic calendar is relatively quiet for the next few days, but it picks up toward the end of this week.

What should you do about it?
Watch for bond prices to improve, but be prepared to lock quickly if the market changes directions.

Economic Calendar

Economic reports that may impact mortgage rates this week:

Date	Report	Period	Prior	Estimate	Actual
Tue 28 Mar	Consumer Confidence	Mar	114.8	114.0
Thu 30 Mar	GDP	Q4 2016	+3.5%	+2.0%
Thu 30 Mar	Core PCE Prices	Q4 2016	+1.7%	+1.2%
Thu 30 Mar	Initial Jobless Claims	Week of Mar 20	261,000	247,000
Fri 31 Mar	Personal Income	Feb	+0.4%	+0.4%
Fri 31 Mar	Core PCE Price Index	Feb	+0.3%	+0.2%
Fri 31 Mar	Chicago PMI	Mar	57.4	56.7
Fri 31 Mar	U of Mich. Consumer Sentiment	Mar	96.3	97.6

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Scott Shenton
NMLS Number: 1039731
Apex Home Loans
Corporate NMLS Number: 2884
waterwookiee@yahoo.com
https://www.apexhomeloans.com/scottshenton
(240) 268-3156
3204 Tower Oaks Blvd, Suite 400
Rockville, Maryland 20852

Apex Home Loans, Inc. NMLS #2884. For more information, please reference the NMLS Consumer Access Website at http://nmlsconsumeraccess.org. Licensed by: DE as a Lender by the Office of the State Bank Commissioner (011603); DC as a Dual Authority Mortgage Lender by the Department of Insurance, Securities and Banking (MLB2884); FL as a Mortgage Lender by the FL Office of Financial Regulation (MLD1088); MD as a Mortgage Lender by the Dept. of Labor, Licensing & Regulation (06-4989); N.J. Department of Banking and Insurance (2884); PA as a Mortgage Lender by the Dept. of Banking & Securities (45078); VA as a Lender and Broker by the State Bank Commissioner (MC1278); and WV as a Mortgage Lender by the WV Division of Financial Institutions (ML-34657).

Rate-Shopper Report for March 20th 2017

Monday, March 20, 2017

What’s going on and why does it matter?
Mortgage bonds opened unchanged this morning after last week’s huge rally. Although the Fed decided to increase short term interest rates last week, their projections for future rate hikes were not as aggressive as the market was expecting.  The market is interpreting this to mean that the Fed is likely to continue their bond-buying program until sometime in 2018. The Fed is the largest buyer of mortgage bonds in the market, and they often purchase up to half the supply of new mortgage bonds being issued on any given day.  The Fed’s mortgage bond buying activity today is limited however, to $825 million in GNMA mortgage bonds.

The economic calendar is light this week. The potential market-movers are likely to be speeches that are scheduled to given by various Fed policy makers, including a speech that Fed Chair Yellen is scheduled to give later this week. Other headlines this week include the first Presidential debate in France, and a hearing in the US House of Representatives related to Russian interference in US elections, with the FBI and NSA directors scheduled to testify. Mortgage bonds are likely to drift sideways this week, unless the headlines sway them in one direction or another.

What should you do about it?
Watch for bond prices to continue drifting higher; but lock your rate quickly if the market changes directions.

Rate-Shopper report 3.6.17

Market Update

Monday, March 6, 2017

What’s going on and why does it matter?
Mortgage bonds opened higher this morning after hitting their worst levels of the year last week. Bonds are rallying as stocks take a break from their record high levels.  Financial market investors are turning cautious in light of political uncertainty in Europe, North Korea’s firing of missiles, and lower economic growth targets set in China.  The Fed is also more supportive of mortgage bonds this week than they were last week.  The Fed is scheduled to purchase a sizable $2.35 billion in 15-year and 30-year conventional mortgage bonds today, and they’ll continue to buy more mortgage bonds throughout the week.  All of this provides a favorable environment for mortgage bonds to rebound from last week’s sell-off.  In economic news this week, we have the closely watched non-farms payrolls report coming out on Friday, and the ADP employment report coming out on Wednesday, both of which may cause some market volatility.

What should you do about it?
Watch for mortgage pricing to rebound, but be prepared to lock your rate quickly if the market changes directions.

FOR THE FULL STORY: CLICK HERE

~ Scott Shenton

http://www.apexhomeloans.com/scottshenton

 

What you need to know about holding title: Guest blog by Jessica Patterson

I had the pleasure of meeting Jessica Patterson about a year ago, and since have been consistently impressed with her knowledge and willingness to help.   Take a look at this great information on holding title in Maryland put together by Jessica.  

~Scott Shenton

Holding Title to Real Estate in Maryland

There are multiple ways to hold title to real estate in Maryland, each with their own advantages and purposes. The first step in determining how to hold title to property would be to determine if ownership is fee simple or leasehold.

Fee Simple: This is the most complete form of ownership. Title to a property that is fee simple means that the buyer is given ownership of the land and any improvements made to the land. The owner has the right to possess, use the land, and dispose of the land as he/she wishes, meaning that the owner can sell the property, give the property away, lease the property to others, or pass the property to heirs upon the buyer’s death.

Leasehold: A leasehold interest is created when a fee simple land owner enters into a ground lease with a person or entity. Compensation is given from the person or entity leasing the land to the fee simple owner, usually in the form of ground rent. The buyer of leasehold real estate does not own the land; they only have the right to use the land for a pre-determined period of time.  Maryland is a unique state in that ground rent is still prevalent and some properties are being held in a leasehold agreement.  In Maryland, there are steps to take if the buyer of leasehold property wishes to purchase the ground rent and hold property fee simple.

After the property is determined to be fee simple or leasehold, buyer(s) can decide how they prefer to hold title. In Maryland, there are several ways a buyer can have an ownership interest in real property alone or with other individuals. There are three common ways to hold title: Tenants in Common, Tenants by the entireties, or joint tenancy.

Sole Ownership: This type of ownership is characterized as an individual or an entity legally capable of acquiring title. Sole Ownership can be held by a man or woman who is not legally married. In Maryland, a married man or married woman may hold title as the sole owner without their spouse on the mortgage or deed, as well.

Joint Tenancy: This type of ownership is characterized as a form of vesting title to property owned by two or more individuals with equal rights in interest to the property as well as the right of survivorship. A right of survivorship means that if a joint tenant dies, title to the property is automatically conveyed to the surviving joint tenants. In Maryland, the deed must include the phrase, “as joint tenants with rights of survivorship” in order to fully convey title to the remaining tenants if one dies. In order to create a joint tenancy, four unities of interest must be present at the time of acquiring ownership:

-unity of time: all interests vested by the tenants occur at the same time.
-unity of title: interests of all tenants must be acquired from the same deed.

-unity of interest: all tenants must have equal interests in the property.

-unity of possession: all tenants have equal rights to possess the property.

Tenancy in Common: This type of ownership is when two or more individuals hold title together and enjoy unequal shares in their interest to the property. One tenant might hold 40%, the other 60% and so forth. There are no rights of survivorship.

Tenants by the Entirety: This type of ownership is characterized as a married couple with the rights of survivorship and neither spouse can transfer his/her half of title to another individual without the other spouse’s approval. A tenancy in common is destroyed if the two parties were to divorce. What is interesting about this type of ownership is that if one spouse owes a debt, the debt collectors may not go after the couple’s property. The two individuals married to each other take on a role of an entity together and as such, if one spouse dies, the other spouse will acquire the property.

When deciding how to hold title, it is important to ask a real estate attorney as this blog is not meant to act as legal advice.  If you have any questions about title or title insurance, feel free to contact me!

Jessica Patterson: National Account Executive: Advantage Title Company

Cited Source:

http://www.marylandattorneygeneral.gov/Courts%20Documents/LandRecSeminar/2004/2004_2_LandRecs.pdf