Protect Against Worst-Case Scenarios

For first-time home buyers, there are numerous steps to securing your dream home. In an ideal world, the process would be straightforward with minimal paperwork and fees involved. However, that just isn't the case.

Fortunately, when things start to go wrong, title insurance can protect you from anything that stands between you and that dream home. Here are three nightmare scenarios that demonstrate why you need title insurance:

The Mysterious Second Seller

Many would assume that the individual or people selling their home to you would, in fact, be the owners. Sounds reasonable enough. However, sometimes the original seller has hidden baggage in the form of incomplete or nonexistent ownership.

In the event that a relative lays claim to your potential new home, you have to negotiate, buy them out, or go to court to duke it out. If a judge rules in favor of the other party, you can lose out on your down payment and any portion of your principal balance paid towards the home.

While a lender's title insurance policy will protect the bank against any costs incurred, this doesn't help you at all. Alternatively, an owner's title insurance policy covers you against any accrued losses, allowing you to walk away as if you never heard of the property, to begin with.

Neighborly Quarrels

We aren't destined to be guaranteed perfect neighbors in life, but some neighbors are better than others. In the event, that your prospective neighbors add to their property and it overlaps onto yours, you can have issues. If this occurs prior a home closing, title insurance will cover the costs needed to resolve the issue out of court.

Hidden Mortgages & Unpaid Taxes

While Cambridge Title Company has an excellent system for conducting a title search on a property, other systems may not uncover incorrectly posted mortgages. If you find yourself saddled with this situation and you have owner's title insurance, file a claim and your policy will take care of the mortgage. Otherwise, you're stuck with the extra costs.

Similarly, if the seller had unpaid taxes on the property and you receive a delinquency notice following the closing, you will be stuck with the taxes. That is unless you have owner's title insurance.

Summary

Life is full of unexpected circumstances. Similar to any other type of insurance that you've purchased in the past, owner's title insurance is there to protect you against life's "what-if's".

For more information on purchasing title insurance, contact Cambridge Title Company by phone at 224-330-1886 or by email at info@cambridgetitleco.com.

Servicing Your Loan

Along with title insurance, loan servicing is another important facet of the home closing process.
Your loan servicer is the organization that collects your loan payments, which can be different from your lender. Either when you first apply for your loan or within the following three business days, Real Estate Settlement Procedures Act (RESPA) requires that your lender or mortgage broker tell you in writing whether someone else may be servicing your loan.

After your settlement, if your loan servicer transfers the servicing of your loan to a new servicer, RESPA requires that you be notified in writing at least 15 days before the transfer. This notice must also inform you of when the transfer is effective and when you will begin making payments to the new servicer. Thirdly, the notice letter must include the new servicer's contact information along with any other information pertinent to your loan's servicing.

In the event that your loan requires an escrow account, your servicer must present you with an initial escrow account statement at your settlement or within the following 45 days. This statement will show all of the payments that are expected to be deposited into your escrow account and all of the disbursements that are expected to be paid from the escrow account during the year.

On an annual basis, your servicer will review your escrow account and send you a disclosure which should include the prior year’s activity. Also, this disclosure must indicate any adjustments in the escrow payments needed for the upcoming year. However, if your loan is overdue by more than 30 days, you will not receive this disclosure. Remember that your monthly payment can increase if your taxes or insurance payments increase.

For additional questions pertaining to loan servicing and escrow services, contact Cambridge Title Company by phone at 224.330.1886 or by email at info@cambridgetitleco.com.