F.A.Q's for Buyers

What is Title Insurance?

Suppose you purchase your dream house and when you arrive in your overloaded moving van, only to find someone else in the house claiming ownership.  What would you do?  Or suppose you are awakened early one morning by a construction crew preparing to bulldoze your entire front yard for a railroad track to be built on an easement claimed to pass through your yard.  What happens now?  What if you received a notice of past due property taxes which must be paid within a few days or the property will be put up for sale?  An Owner's Policy of Title Insurance is designed to prevent these problems from ever happening, and give you a source of protection if something unforeseen does occur.

Title Insurance is the only guaranteed protection against real estate title losses.  It insures your ownership of your home.  Your lender will require Lender's Title Insurance, but that only protects their interest.  It insures the lender for the original amount of the loan against invalidity of the mortgage which secures the loan.

The Owner's Policy of Title Insurance protects you.  It informs you of any other interest in the property, such as liens and encumbrances, and protects you against unknown claims of ownership to your interests in your property.

Most people have fire, car, and life insurance.  You pay premiums every year to continue your protection.  When you purchase an Owner's Title Insurance Policy, you pay your premium only once for coverage that will protect your initial investment for as long as you own your home.

Title insurance protects you from hidden risks not revealed by an examination of the public records.  Common examples of hidden risks include:

Forgery or Fraud
Missed Taxes
Undisclosed or missing heirs
Incorrect legal descriptions
Conveyance by a minor
Incorrect indexing at the courthouse
Mental incompetence of grantors
Missed easements

How Much Home Can You Afford?

How much you can borrow will depend on your income, down payment, job stability, existing debts, credit references and payment history. Lenders usually use the following two qualifying guidelines to decide how much of a loan you can manage:

Your monthly housing expenses – mortgage payment, property taxes, insurance, etc. These expenses should be no more than 28 percent of your monthly gross income.

Your monthly living expenses and any long-term debts – utilities, car and school loan, child support, health and car insurance, etc. These expenses should be no more than 36 percent of your monthly gross income.

Before you start your house hunting in earnest, your lender can pre-approve you to determine a price range you can afford.  According to the Cleveland Area Board of Realtors, pre-approve is a necessary part of the home buying process that saves you time and money.

Don't be shy or withhold information about your income or credit status.  Your lender isn't trying to pry, Rather he or she must know all details related to your ability to obtain a mortgage.

Your lender can provide you with a pre-approval letter which will show the sellers of the home you buy that you are serious about your purchase.  It can even put you above someone else on the seller's list when the bidding wars begin, because they will know they don't have to wait for or worry about your loan approval.

Typical Home Buying Mistakes to Avoid!

A great way to make the home-buying process flow smoothly is to educate yourself and learn from mistakes others have made. This can make the difference between buying the home of your dreams and buying a "lemon."

Not getting pre-qualified or pre-approved
Receiving pre-qualification or pre-approval from a reputable lender strengthens your negotiating position. It shows agents and sellers you are serious about buying a home.

Not seeking guidance from real estate inspectors
These people are trained in inspecting. Find someone you respect and trust and allow them to help – it will benefit you in the end.

Not getting enough information about the properties
Obtain market statistics and sales records for the area you are considering so you know how things (prices, conditions, list-to-selling price ratios) stack up in your neighborhood.  if you would like a property analysis, check out homegain.com to view the information online, or click here to send us an email request, and we can email it back to you.  

Not looking at enough houses for sale
The more you see, the more you’ll learn about what you want and what each house is worth.

Forgetting to calculate all the costs
When calculating the maximum price you can afford, don’t forget to include hidden costs, such as closing and courier costs. Calculate a reasonable price range and look for a house that is priced toward the lower end. for a list of closing costs, order our FREE Closing Package.  

Not asking enough questions
Don’t be afraid to ask questions! You’re not supposed to know everything about buying a home. Remember, this is potentially the biggest purchase you will make.  Don’t buy a "lemon" because you didn’t ask enough questions!

Fear of losing a specific house
Don’t fall in love with the first home you see. New listings come onto the market all the time. The best deal may still be around the corner.

Not looking past the interior decorating or cosmetic improvements
Don’t choose a house because you like the interior decorating – that is not what you are buying, and it will probably go with the sellers when they move. Check out the actual structure of the house!

Not checking out every nook and cranny before purchasing
Go through the house with a fine-tooth comb. You don’t want to find out after you’ve bought the house that the roof is leaking. Open cabinets, turn on every switch, notice details, move furniture away from the walls, look in the attic, turn on faucets.

Not making a low offer
Pay only what you can afford. The seller can always make a counter-offer, and you can counter-offer again until you settle on a suitable price, or you can simply walk away.

Being pushed into buying a certain home
Don’t make a decision until you’ve seen enough to pick the best one.

Timing problems in your home purchase
If you're renting now and have just two months to go on your lease, don't allow your rental property manager to talk you into signing another lease for 12 months.  See if you'll be allowed to stay with a month-to-month lease.  If you're selling another home, be sure to read A note for Sellers who are also buying a new home.

Buying in an unfamiliar or inappropriate neighborhood.  Before you buy, spend some time in the neighborhood, driving up and down streets and noticing if people there are friendly and approachable, or if there are signs of criminal or gang activity.  Also notice if neighbors are your age.