Posts Tagged ‘title insurance lapeer mi home purchase’

why an FHA mortgageWhen an Oakland or Lapeer County home buyer comes to us with a pre-approval letter for an FHA mortgage we will ask both you and your loan officer “Why FHA?”

It’s not that we are FHA snobs or don’t want to work with FHA buyers, but FHA does come with its own baggage. Baggage that affects you the buyer, not me or anybody on my team. We are very experienced dealing with FHA buyers, and FHA is a good program for the right buyer. But it’s not for everybody.

FHA is good if you have bruised credit; it is a program that is more forgiving of less than perfect credit. And what better way to repair credit than making a house payment on time for a few years since your house payment will probably be lower than the rent you are currently paying.

Some people need to go FHA because of their debt to income ratios. FHA allows you to carry more debt than conventional mortgages do.

But if your reason for going FHA is solely because of down payment you may want to find another lender. A big part of a loan officer’s job is to fit you with the loan that is best for you.

Two of the biggest issues with FHA loans from the buyer perspective: 1) Many sellers have heard too many horror stories and are somewhat biased against FHA buyers. You want your offer to be as strong as possible and an FHA offer will make you come across as a weak buyer. 2) You will be paying mortgage insurance for the entire life of the loan.

Until recently if you could show 20% equity after a couple years, you could drop the mortgage insurance from your FHA mortgage. But the rules changed last year and if you want to drop the mortgage insurance you need to re-finance to a conventional loan. And with today’s rates under 4% do you really think you will get that rate in a few years?

There are now conventional mortgages with as low as a 3% down payment. Once you find a house you can lock into today’s low low super low rates and not wonder and hope for the next 3 or 4 years that the rates don’t go up a per cent or two.




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Commonly Asked Questions About the North Oakland County and Lapeer County Home Purchase- Why are the Seller and I Both Paying for Title Work/Insurance?

When you get your closing statement you will probably notice charges to both you and the seller for title. A very over simplified way I’ve explained this in the past is that the seller is paying to supply clean title to the house and you are paying to supply clean title for the mortgage company. For example- if you have an IRS lien it can attach to your house and would have first position in front of the bank.

This morning I went to the web site for the title company I prefer my clients use- First American Titlewww.FirstAm.com. They have a much more detailed explanation than the one I’m going to offer here.

There are two types of title insurance when there is a purchase with a mortgage. The company you’re borrowing the money from for your mortgage (whether that is a bank, credit union, etc) will require what is called a Loan Policy which protects their interest. The cost is based on the loan amount and is less than the Owner’s Policy which is the part the seller typically pays for.

The Owner’s Policy is usually for the amount of the sale price and protects you, the buyer, if a covered title problem comes up later. Some of the hidden title problems that would be covered can include errors or omissions in deeds, mistakes in examining records, forgery, undisclosed heirs- basically insuring your ability to be able to pass on clean title when you go to resell later.

If you purchase with cash or land contract you will not need the Loan Policy but it is still prudent to get the Owner’s Policy. The few hundred to couple thousand dollar investment is well worth it even if you have a title search performed and find no problems or if you buy from a relative. The Owner’s Policy provides assurance that your title insurance company will stand behind you- monetarily and with legal defense if needed- if a covered title problem arises after you buy your home.

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