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What Is Title and Escrow?
Simply put, whenever someone decides to buy or refinance property, title companies have the ability to check public records regarding the history of that property. Looking for uncleared liens, claims or easements is part of what they do. Sometimes long-lost relatives may have a claim on the property without the seller's knowledge. People have even fraudulently sold houses that don't belong to them. This is why when utilizing a commercial lender, they require title insurance as part of the package.
Title insurance serves as basic risk elimination. A preliminary report outlines the conditions under which a title will be insured. Once the new deed and loan documents are recorded, a title insurance policy is issued to the new owner and lender. This assures the lender of the validity and priority of their loan document. And as for the new owner, any undisclosed claim (covered by the owner's policy of title insurance) that threatens ownership of the home will be dealt with, or you will be reimbursed exactly as your policy of title insurance provides.
Another service offered by many title companies is escrow. When buying, selling or refinancing real estate, a neutral third party is needed to handle all deposits of funds, documents, special reports, and other important papers. This process is referred to as being in escrow. You'll meet with an escrow officer who will oversee this portion of the property sale. It is also the escrow officer who you'll meet with to sign all the documents prior to your property closing escrow, another catchy industry term to remember.
As you can see, a title company performs a vital, yet hidden role in guaranteeing the security of your home. And just like your car insurance, you never realize how important it is until the unexpected happens.
New Home vs. Used Home?
Decisions don't come any easier. New is new. Used can be asking for trouble. Like suddenly having to pay for surprises such as replacement plumbing and roofing repairs. Well, your worries are over when you buy a brand new home. Here's why:
USED HOME |
NEW HOME |
Structural vulnerability and potential hazards such as lead paint and asbestos. |
Stringent, up-to-date structural and building codes |
Obsolete floorplans |
Choice of versatile, award-winning designs with master suites, walk-in closets, gourmet kitchens and lots of customizing options |
Unsightly power lines |
Underground utilities, allowing beautiful country surroundings |
The painful search for the right mortgage |
Community Residential Mortgage makes it easy to qualify with the best selection of competitive financing programs |
Costly redecorating |
Decorating choices, often at no extra cost through our professionally staffed Design Center |
Energy hogs |
State of the art energy saving items like dual paned windows, greater insulation values, and high efficiency furnaces and air conditioning units are featured |
Dated features |
Contemporary features such as media alcoves, pot shelves, vaulted ceilings and abundant windows to let the outdoors in |
Warranty not included |
A new Seeno home must conform to
California Fix It Law (California Civil Code Sections 49.5
and 895 to 945.5, formally known as SB800) standards.
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"It's always something!" |
Brand new everything, minimizing repairs and maintenance |
If you must buy something old, antique furniture
always looks great in a new home!
Get A Raise Without Asking Your Boss!
A Simple Equation:
HOME OWNERSHIP = TAX SAVINGS
One of the last major tax shelters for individuals is the home in which they live. The mortgage interest and real estate taxes paid on your home are tax deductible as an itemized deduction. This tax deduction can be substantial, so much so that it can enable someone currently renting to afford a much higher monthly payment. The effect of tax savings can help you realize one of your dreams-home ownership.
The following example illustrates how
the tax savings can work for you. It assumes a minimum down payment
of 5% and an interest rate of 6.5%. The tax savings is calculated
using a combined Federal and State tax rate of 30% of the mortgage
interest and real estate taxes.
Example: |
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$300,000 home* -- comparable monthly payment
$1,995
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Initial 5% Down Payment |
$15,000.00
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Principal & Interest |
$1,801.39
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Real Estate Taxes |
$312.50
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Insurance |
$66.67
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Mortgage Insurance |
$118.75
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Total House Payment |
$2,299.31
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Less Approx. Tax Savings |
(535.01)
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Comparable Monthly Rental Payment
(actually less than rent!)
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$1,764.30
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* Approximate income to qualify is $8,300
per month. The estimated combined federal and state tax saving of
30% assumes you will get the full benefit of the mortgage interest
and real estate tax deduction. The calculations above are examples
only. You should consult your tax advisor to discuss your own tax
situation.
OWNING A HOME = $610 MORE A MONTH
IN INCOME**
The tax advantages of home ownership are GIVE and TAKE - When you own, you TAKE more of your paycheck home and GIVE less to Uncle Sam. It's that simple!
The combined effect of today's low interest rates, attractive real estate prices, and tax savings make home ownership a very attractive and obtainable alternative to renting. There are many loan programs available which can make it even easier to qualify for home ownership such as adjustable rate loans, zero down loans, VA loans and 3% down conventional loans.
** Figure based on the difference between
estimated monthly net pay on an annual income of $99,600 (both
spouses employed) when claiming a W4 of Married with 10 allowances
as opposed to Married with 2 allowances. Please note that figures
are an approximation based on standard income tax deduction guidelines.
Consult your personal tax advisor for details on your tax situation.
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