Phone: 239.540.7007
Title Insurance

Fees to Budget for When Applying for a Mortgage

When you were younger and fantasizing about your dream home the last thing that you thought about was needing to apply for a mortgage just to buy it. If you are at the point where you are budgeting to buy a home, below is a post from Schutt Law Firm with some common fees you should expect to pay and include in your budget.

Establishment Fee

Also known as an Application Fee, this is one of the harder pills to swallow when it comes to mortgage related fees. Namely because it seems ridiculous to pay for an application when there is no guarantee that your mortgage will be approved. However, it is for this very reason that the fee exists. To ensure that you are creditworthy person, each lender needs to complete their due diligence, involving several checks provided by a range of third party companies. Each of these checks comes with a fee which is passed on to you in the form of an establishment fee.

Ongoing Maintenance Fee

Next on the list is the fee charged just to have a mortgage. Well, it’s a little more in-depth than that. Similar to the fee above, this fee exists to maintain your mortgage account, including all administration costs relating to reporting and funds management.

Early Repayment Fee

If you have high hopes of paying off your mortgage in record time, then this is a fee that you should pay attention to. When a lender processes your application, they consider how much interest they will earn from your repayments over the full course of your mortgage. If you begin to make additional payments to reduce the interest, you pay you are effectively reducing their income. As you can imagine, a mortgage lender isn’t going to like this and will often charge an early repayment fee for each payment you make in addition to your agreed payment schedule.

Title Insurance to Protect Your Investment

Any reputable mortgage lender will require a form of title insurance to be purchased to provide financial protection over the title of the property. Speak with Stewart Law Firm at 239 540 7007 to learn more about how title insurance can protect your investment.
Owning real estate is one of the most precious values of freedom in this country. You want the assurance that the property you are buying will be yours. Other than your mortgage holder, no one else should have any claims or restrictions against your home.

Title insurance is issued after a careful examination of the public records. But even the most thorough search cannot absolutely assure that no title faults are present, despite the knowledge and experience of professional title examiners. In addition to matters shown by public records, other title problems may exist that cannot be disclosed in a search. Title insurance eliminates any risks and losses caused by faults in title from an event that occurred before you owned the property.

Title insurance is different from other types of insurance in that it protects you, the insured, from a loss that may occur from matters or faults from the past. Other types of insurance such as auto, life, or health cover you against losses that may occur in the future. Title insurance does not protect against any future faults, but does protect you from risks or undiscovered interests. Another difference is that you pay a one-time premium for a policy that remains effective until the property is sold to a new owner - even if that doesn't occur for decades.
What is a Lender's Policy?

A lender's policy, also known as a loan policy or a mortgage policy, protects the lender against loss due to unknown title defects. It also protects the lender's interest from certain matters which may exist, but may not be known at the time of the sale.

This policy only protects the lender's interest. It does not protect the purchaser. That is why a real estate purchaser needs an owner's policy.
What is an owner's policy?

An owner's policy protects you, the purchaser, against a loss that may occur from a fault in the ownership or interest you have in the property. You should protect the equity in your new home with a title policy.

What does an owner's policy provide?

- Protection from financial loss due to demands that may be charged against the title to your home, up to the cost of the title policy.
- Payment of legal costs if the title insurer has to defend your title against a covered claim.
- Payment of successful claims against the title to your home covered by the policy, up to the cost of the policy.
Why the seller needs to provide title insurance?

Any purchaser will need evidence that his investment in your property is free of title defects. The title insurance policy that you provide the purchaser is a guarantee that you are selling a clear title to your real estate, unencumbered by any legal attachments that might limit or jeopardize ownership. It will reassure your purchaser that he or she is protected from any risks or losses and could help you close your deal.
Why the buyer needs title insurance?

Without title insurance, you may not be fully protected against errors in public records, hidden defects not disclosed by the public records, or mistakes in examination of the title. As a result, you may be held fully accountable for any prior liens, judgments or claims brought against your new property. If this should occur, your title policy insures that you will be defended at no cost against all covered claims up to the amount of the policy.
How much does title insurance cost?

The insurance commission approves and controls the premiums for title insurance policies. The premiums are paid only once and the cost depends upon the purchase price of the property and the policy amount must be equal to the purchase price.
What does title insurance protect from?
  • Fraud
  • Adverse possession
  • Rights of divorced parties
  • Deeds by minors
  • Undisclosed Heirs
  • Errors in tax records
  • False affidavits of death or heirshipProbate matters
  • Deeds and wills by persons of unsound mind
  • Conveyances by undisclosed divorced spouses
  • Forfeitures of real property due to criminal acts
  • Deeds by persons falsely representing their marital status
  • Documents executed by a revoked or expired Power of Attorney
  • Defective acknowledgements due to improper or expired notarization
  • Mistakes and omissions resulting in improper abstracting
  • Forged deeds, mortgages, wills, releases and other documents
  • False impersonation of the true land owner