Anti-Discrimination in Home Buying

Many people may be afraid of facing discrimination when applying for credit. However, numerous protections are offered throughout this process.

The Equal Credit Opportunity Act (ECOA) prohibits creditors from discriminating against applicants throughout the transaction process. These protections are focused on discrimination because of race, color, religion, national origin, gender, marital status, or age.

In addition, creditors are unable to discriminate against an applicant due to any portion of his or her income deriving from a public assistance program (i.e. welfare). For those afraid of retaliation for exercising rights under federal consumer credit protection laws, there are protections in this case as well.

Not only does the ECOA apply to credit transactions involving residential property, it also extends to other credit transactions. For example, if you're applying for a credit card or an auto loan, you would be covered here.

Another law, the Fair Housing Act, prohibits housing discrimination because of race, color, religion, sex, disability, familial status, or national origin. This ranges from someone selling a home to you, loan application, property improvement, and residential real estate appraisal

For additional questions regarding real estate law, contact Cambridge Title Company by phone at 224.330.1886 or by email at info@cambridgetitleco.com.

Advice for Managing Title Insurance

Title insurance is a practical necessity to any real estate closing. While lender's title insurance protects those who extend a mortgage to you, owner's title insurance protects your right to a newly purchased property. While it doesn't insure you against every possible situation, it does cover a majority of the more common blindsides that you may face as a homeowner.

With that said, here are some common tips and stumbling blocks when dealing with title insurance.

ProTip #1: Read the Binder

Let's be honest, title insurance paperwork isn't the most exciting thing in the world. But it doesn't hurt to review it. The title insurance binder or commitment can include valuable information, such as:

• old deed restrictions
• the home's history
• land usage restrictions
• homeowner association restrictions

While you can risk violating any of these restrictions, in some areas, individuals drive around the neighborhood to ensure there aren't any apparent violations. On a year-to-year basis, complaints range from minor inconveniences to full requests for removal of structures on another person's property.

ProTip #2: Understand the Exceptions

The title insurance packet will include a section that elaborates on what is exempt from the policy's protection.

For example, utility providers need to be able to access their respective power lines, piping, etc. For certain utilities, such as water lines, employees of these companies need to dig underground for access. If an owner has something obstructing their path, like a concrete patio, the utility providers can destroy it to get through and leave the homeowner with the full damages.

ProTip #3: Understand What is Covered

On the flipside, it's important to thoroughly understand the provisions and protections offered by your title insurance policy. In fact, these can change from state to state.

For example, New Mexico excludes property survey coverage from a basis title insurance agreement. This is done to make the premiums more affordable for the home sellers.

ProTip #4: Don't Rely on Others

Ask as many questions as humanly possible to ensure you fully comprehend your title insurance policy. If you allow others to give you their understanding, you're basically playing "the telephone game".

This isn't to say that realtors, attorneys, and title insurance companies aren't trustworthy. This is merely to advise that you seek to retain the knowledge for your own purposes.

For more information on title insurance, contact Cambridge Title Company by phone at 224.330.1886 or by email at info@cambridgetitleco.com.

Determining a Home within Your Budget

Home buying mandates a series of small decisions. Do I live in the city or in the suburbs? How many bedrooms do I want to have? How far is the location from my work environment?

All of these decisions cumulate in one large one: Where will I live?

For many prospective home buyers, the first step is to determine your budget. To calculate what type of home you can afford, it's crucial to first know your monthly income. Secondly, determine your total monthly expenses, including items such as credit card bills, insurance premiums, and car payments.

When synthesizing this information, consider reaching out to a financial professional. For example, a housing counselor can help you determine what you can reasonably afford. By keeping your payments within an affordable budget, you can avoid potential financial hurdles, such as foreclosure.

Mortgage lenders will tell you the amount of the loan they're willing to offer you. This takes your ability to repay the loan into consideration. That said, it's probably safe to say that you comprehend your socioeconomic situation better than anyone, so invest thorough thought into one of the biggest decisions you'll ever make.

For more information on the finances of home buying, contact Cambridge Title Company by phone at 224.330.1886 or by email at info@cambridgetitleco.com.

Types of Loans and Programs

Shopping for your loan is probably the most important step in your home-buying process. Mortgage brokers and lenders have a wide variety of mortgage products. The type of loan product and your interest rate will not only influence your total settlement costs but will determine the amount of your monthly mortgage payment.

Government Programs

You may be eligible for a loan insured by the Federal Housing Administration (FHA), guaranteed by the Department of Veterans Affairs (VA), or offered by the Rural Housing Service (RHS). These programs usually require a smaller down payment. Ask your lender or mortgage broker about these programs. You should shop and compare quotes from different loan originators because each may offer different rates and loan terms.

If you are a first-time home buyer, ask your real estate agent/broker and loan originator about the availability of local or state programs such as reductions in transfer taxes, special income tax deductions, or state homestead exemption discounts.

Types of Mortgages

Two of the most common types of mortgage loans are fixed-rate mortgages and adjustable-rate mortgages. The interest rate on a fixed-rate mortgage will remain the same for the entire life of your loan while the interest rate on an adjustable-rate mortgage (ARM) may adjust at regular intervals and may be tied to an economic index, such as a rate for Treasury securities. When the interest rate on an ARM adjusts it may cause your payment to increase.

Some adjustable-rate mortgages allow the borrower to pay either the “interest only” or less than the “interest only”. In both options, none of the mortgage payment is applied towards the loan balance (principal). In a less than “interest only” option, the unpaid interest is added to your loan balance and you can owe more than the amount you initially borrowed, even if you make all your payments on time. This is called negative amortization. If you are a first-time borrower and your mortgage could result in negative amortization, your lender is required to make sure you get homeownership counseling before you borrow the money.

When the loan balance increases to the maximum amount the loan is “recast” and your loan payment may double or even triple. When faced with “payment shock,” you may discover too late that the loan payments no longer fit within your budget and that the loan is difficult to refinance. You may then be in danger of losing your home.

For additional information on the types of loans and government programs, please contact Cambridge Title Company by phone at 224.330.1886 or by email at info@cambridgetitleco.com.

Protecting Your Property Rights

When it comes to protecting your rights as a property owner, start by purchasing an owner’s title insurance policy. A one-time fee to a title company, such as Cambridge Title Company, can protect your property for you and your heirs throughout the duration of property ownership.

An owner’s policy protects you from:

• Unpaid mortgages

• Unpaid property taxes

• Child support liens

• Missing heirs who could claim the property belongs to him or her

• Missed easements or rights of way that could limit your use of the property

Title insurance policies take on two forms: an owner's policy for the home buyer and a loan policy for the lender. While a majority of lenders require a loan policy based on the value of an when issuing a loan, it only serves to protect the lenders. This is why it's vital to purchase an owner's policy to ensure perpetual protection.

For additional questions on how Cambridge Title Company can help you with an owner or lender policy, contact us via phone at 224-330-1886 or email at info@cambridgetitleco.com.