When you purchase a home, you will have a number of fees to pay. One of those could be something called private mortgage insurance. Private mortgage insurance (PMI) is insurance to protect your lender in the case that you default on the loan. Here is what you need to know about private mortgage insurance:
Understanding Warranty of Title
As a loan officer, you must know what a warranty of title is and how it can affect the buying and selling of homes. When a person wants to buy or sell a home, they look to you to help make the process as smooth as possible. This means making sure there are no claims on the home and that the owner can legally sell the property.
Warranty Titles & Deeds
Warranties of title are included in warranty deeds, which are used to legally transfer property. They are the most common form of property transfer and guarantee a good and marketable title. A warranty of title ensures that the seller has the legal right to sell the property and that no one else has a claim to it, like an ex-spouse.
A warranty of title is different from a quitclaim deed in that quitclaim deeds are not used to transfer property through a sale. Rather, they remove someone’s rights and interest in the property or transfers property to a family member.
Selling & Buying Homes with Warranty of Title
When selling a property with a warranty of title, the seller must have no liens on the property. The reason being, if the buyer buys a home with liens, they will not be able to secure a clear title to the property.
If a buyer unknowingly buys a home that has a claim on it and that information comes to light later on, either because it was not disclosed or unknown, they are not responsible for it. The seller is responsible and must assume all financial liability for settling the claim on the property.
When There is No Warranty of Title
Warranties of title are not included in the following sales:
In each of these instances, the seller is not the owner, as the owner has either died or had the property confiscated. If the buyer bought a home that was being foreclosed or has a tax lien on it, they will be responsible for paying it off. As a loan officer, you must make buyers aware of this information—especially if they are paying for the home with cash.