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The Title and Escrow Process

Title insurance extends protection against matters of record and many non-recorded types of risks, depending on the type of policy purchased.

A Standard Policy of title insurance, in addition to matters of record, protects against:

  • Off-record hazards such as forgery, impersonation, or failure of a party to be legally competent to make a contract
  • The possibility that a deed of record was not in fact delivered with intent to convey title
  • The loss which might arise from the lien of federal estate taxes, which is effective without notice upon death
  • The expense incurred in defending the title

Escrow is a time period during which the paperwork required for the sale or refinance of real property is processed. An Escrow Company acts as a neutral agent of both buyer and seller. The escrow holder follows the directions of the principals and collects and distributes documents and money as agreed upon in the purchase agreement or escrow instructions.

Interest is Tax Deductible

The interest that is accrued and paid on your mortgage is tax deductible and is one of the greatest benefits of home ownership. If you have an interest only loan, you can write off the full 12 months mortgage payments.

Negative Amortized Loan

Also known as a PayOption Arm Loan occurs when loan payments are not enough to cover the amount of interest due for that payment period. The unpaid interest is calculated and added to the total loan amount, increasing your outstanding balance. The good thing about negative amortization is that it allows mortgage payments to stay under a certain level if the interest rate on an adjustable rate mortgage increases. However, the bad thing about negative amortization is that eventually, the mortgage payments may need to increase to allow the larger loan amortize over its remaining life. Thus, the increase in monthly payments can be significant.