Once a home is secured for purchase, the lender requires title insurance, which must be secured before the transaction closes. When selecting a title insurance company, you will be given the option of which coverages to choose.

A closing protection letter is one of these, which a title insurance company will provide to the lender, buyer, and seller.

What is it? And is it necessary?

A closing protection letter (CPL) is issued by the title underwriter. This document ensures that the underwriter will protect its client from any mistakes made by the title agent who handles the escrow accounts associated with the transaction.

The title agent is responsible for handling large sums of the lender’s and buyer’s money, and mistakes can be made. For example, a mistake could be if the agent misplaces or mispurposes the funds in your escrow account. There is also the risk of an agent being dishonest or fraudulent.

In any case, where a mistake is made on behalf of the agent, the closing protection letter is drawn up so that the title underwriter will protect a specific party to suffer no actual loss.

Put simply, a closing protection letter is a form of insurance intended to provide coverage to specific parties of the transaction. Each party will decide whether or not it is necessary. However, a lender will rarely hire a title agent without the issuance of a CPL, and the burden of the fee is typically placed on the buyer.

It is natural to feel a little uneasy about an insurance company handing you a document intended to protect you from them, but charge you for that document. But keep in mind that this is something they are legally required to do.

Also, not all accounts where these documents are put into effect are fraud or dishonesty. Human error does occur, and without this document, an honest mistake can cost you thousands of dollars.

What should the closing protection letter include?

All CPLs are transaction-specific and what they offer coverage for depends on the insurance being issues. However, there shouldn’t be much deviation from one contract to the next. Please, reference the image below for an indication of what a CPL should look like. [Read more…]

The most common question we hear from home buyers outside of “Where are you located?” is regarding title insurance costs.

You may have heard title insurance costs roughly around $1,000 per policy. This is true, but you likely want a more accurate number before you begin to approach the closing table so you are not caught off guard and can make sure you’re getting a fair deal.

Luckily, getting a rough idea of how much title insurance will cost you is relatively straightforward. It’s based on the price of your property and where you are located.

But remember that there are two different types of title insurance – owners and lenders. A few factors also help to determine costs.

• Owner’s Title Insurance: Primarily based on the overall sales price of the home and its location. In most cases, it’s the more expensive policy, and this is because down payment amounts, loan amounts, and even your credit history are also figured into the policy.
• Lender’s Insurance: Solely based on the total loan amount and the state where the property is located. Less is factored into the policy, so it will almost always have a lower price than the owner’s insurance.

You can often expect title search fees to be included in the cost of your title insurance quote. This does depend on the insurance provider, but most providers will make it clear if they do. Also, if you can bundle your policies together, it’s wise to do so. Doing so can result in a reduction of the fees.

How to Calculate Title Insurance Quotes

How can you calculate it on your own? Let’s take a look at some of the details you need to be aware of.

Again, location is one of the most significant contributing factors to how much title insurance policies will cost. The good news is that each state regulates policy rates, and what you will pay with one company should closely match what you would pay with another.

However, prices will be different, and you have the right to shop around for the best rates. You should also note that you have the option to select between basic and enhanced policies. [Read more…]

As you’re closing on a home, helping a client, or brokering a deal; you’ll come across a document called the closing disclosure (or CD). A closing disclosure can become very frustrating and cause anxiety when you first read it. Why? Because you’re told to act immediately upon receiving it, and let’s face it, if you’re not a lawyer this can be intimidating.

The anxiety and confusion is mostly caused because the closing disclosure will only be in your possession just a few days before your closing appointment, and you’ve already had to deal with a million papers and meetings and inspections. This just adds too your pile of work.

But never fear! We’re here to help you through the ins and outs of the closing disclosure and purchasing a property so you can comply with the three day timeline.

For starters, you already know it’s your job to review the closing disclosure immediately upon receiving it. The three day timeline exists to ensure that you have enough time to remedy any discrepancies or issues within this document.

The first and most important thing to do with your closing disclosure is to compare the loan estimate on the document with the loan papers you received after applying for your loan. You are making sure the closing disclosure matches the loan estimate as closely as possible to avoid hold ups at closing.

It’s important to note that the loan estimate is an estimation of payments and fees. Some variances are to be expected, while others shouldn’t be present at all. If they do exist, you want to address them before closing.

The timeline helps promote a smooth closing process. Nobody wants you to feel confused or frustrated at the closing table. Instead, they want you to feel prepared and collected. The agent handling your closing services will also be happy to explain anything else that has your worried at the appointment and likely before.

The Three Day Rule

But how long before closing should you be supplied with the CD? This is where the Three Day Rule comes into play. This rule is simply put into place to ensure you have received the closing disclosure three days before closing.

Receiving the closing disclosure three days in advance ensures you will have had enough time to deal with any potential issues and know what you will owe upon consummation. You know what will be expected of you well before you become legally obligated to fulfill your end of the contract.

How Does the Three Day Rule Work?

The three-day rule applies to business days, including Saturdays. But Sundays and Nationally recognized holidays do not count. This means you may technically have more than three days before closing to review the document. [Read more…]

Your offer got accepted, and then they drop the news on you. There’s an easement on the property. At first, it may seem like an intrusion, but ultimately, it’s not all that bad. You may hardly notice anything at all.

A property easement is a nonpossessory right to use or enter a piece of property for a specific purpose. It does not give anyone the right to use your property for any other purpose than is explicitly stated.

Easements are typically issued for two reasons.

1. The most common cause is to allow utility companies to access and maintain power lines.
2. Otherwise, an easement is commonly granted to enable another landowner to travel across your property to access the main road.

In any case, it does not grant any individual access to your property in its entirety. There are some instances where it may allow construction on your property, and you will need to pay careful attention to this.

There are many other possible reasons for an easement to be granted on a piece of property. Different types of easements are issued because of this. For example, an easement granted to a utility company is not the same that will appear when another property owner simply needs access to roadways.

Understanding how one will use your property becomes very apparent once you know the different types of easements.

Types of Easements

[Read more…]