Jan 2, 2021

The Truth about Title Theft Protection

You may have seen the ads or heard the buzz about companies offering title monitoring services or “title theft protection.” Are they legitimate or just a scam? Is there any real value in these services?
First, let me clarify that “title coverage” offered by some of these unregulated companies is not title insurance. They do not actually protect you from fraud, title thieves, scammers, etc.  Their standard service does include taking any actions regarding the rightful ownership of your property.

What is Title Theft Protection?
Monitoring services like Secure Title Lock and Home Title Lock offer subscriptions that say they will alert you to court filings affecting your home’s title. For $100-150 a year, they will monitor court records to show title fraud or theft. The “protection” they offer is basically a notification that someone has changed the ownership or deed to your property.
“Title theft” is a fairly new term that has generated a handful of companies feeding on consumer fears. These companies suggest that criminals can “steal” your property by forging your name on a deed, then resell the property or take out a mortgage loan against it. They claim a title thief can stick you with a debt that isn’t yours.

That isn’t true. Though a title thief or forger could attempt to steal your home, the consequence is actually a lot of headaches and legal hassles for a property owner. Proving and dealing with fraud can be time consuming and expensive.  Title theft protection services are meant to be proactive in helping you shut down mortgage fraud.
The benefits of a title monitoring service are ambiguous. They are only designed to alert you to a change in your title. They don’t prevent the fraud and they don’t actually help you deal with it if it happens. A title theft monitoring service will not help to clear or correct a title. They have no legal obligation to assist the owner with a title theft and they don’t offer protection against financial losses. That’s what home title insurance is for.

What is Title Insurance?
Title Insurance protects the owner and their lender from the possibility of someone contesting their ownership of a property. When buying or refinancing a home, you need a title insurance policy if you are closing at a title company or getting a mortgage loan. The title insurance premium paid at closing protects you for the entire time you own the property.
Title insurance not only protects you from financial loss, it requires the title company to legally defend you if your ownership is ever challenged. However, it insures against issues on the title when you purchase the property. It doesn’t cover future criminal incidences.
How to Protect Your Home Title
You don’t need to pay a company to protect you from thieves putting their names on your home title. You can easily monitor your title yourself for free. Just go to your county’s tax web site and periodically check your property record. Ensure that it shows your correct name and address. 
If you discover that your property ownership has been fraudulently changed, contact an attorney. The county clerk at the property recording office can also advise you on filing a notice affidavit with the county court.  [where: 75230]

Dec 27, 2020

When is Refinancing Worth It?

The refinance market is booming with homeowners taking advantage of record low interest rates. However, millions of homeowners are passing on the opportunity to save money by refinancing their current home mortgage. Many of those mortgage holders are just not sure if refinancing is worth it.

The Pros And Cons

Refinancing is replacing a current mortgage with a new one. The new mortgage loan pays off the old one, and the homeowner is then responsible for paying the new mortgage. There are significant time and costs associated with refinancing. It can save a homeowner money or cost money.

“Any determination of whether a borrower should refinance is dependent on whether or not the transaction creates a tangible benefit,” says loan officer Alison Hannah, Vice President of IberiaBank.

Do The Math – Consider The Fees

Closing costs are an important factor in deciding whether to refinance. Like an original mortgage, refinancing requires a title search, credit report, appraisal, application fees, recording fees, tax certificate, and title insurance. Costs can also include an origination fee, processing fees, and more. Refinance fees and closing costs can add up depending on the loan amount, discount points you may buy, and what the lender charges.

Total closing costs typically amount to 2 to 6% of the new loan amount. According to Freddie Mac, the average closing costs on a mortgage refinance are $5,000.

In December 2020, the Federal Housing Finance Agency plans to add in a refinance fee of 0.5 percent of the loan amount to all refinance loans sold to the government-supported entities Fannie Mae or Freddie Mac. That accounts for about 70% of all U.S. mortgage loans.

A lower interest rate might not be worth it if your savings are consumed by fees and closing costs.

How much should mortgage rates fall before you think of refinancing?

Many experts recommend refinancing when it would reduce an owner’s interest rate by 1 percent or more. Every refinance has a break-even point. That is a point in time where your refinance pays for itself.

“The cost to refinance must be recovered via the reduced payment in a short enough period of time so as to make sense with respect to the borrower’s holding period,” advises Hannah.

To determine this, divide your mortgage closing costs by the monthly savings of your new mortgage. If you are paying $5,000 in closing costs and will save $200 per month because of refinancing, it will take 25 months to break even.

Break-Even Period on a 30-Year Mortgage

Use a mortgage refinance calculator to enter your current interest rate, monthly payment, and your new loan terms and calculate how the two mortgages would compare. If you do not plan to keep your home past the break-even point, it does not make sense to refinance.

Every homeowner’s financial needs and goals are different. A 1 percent interest rate decrease may offer significant savings on a $1 million mortgage but not make financial sense for a $100,000 mortgage.

Getting a Mortgage Can be Complicated

The refinance activity this fall has been a rollercoaster pattern of increased refinance application volume followed by a dip in requests. Forbes Advisor published a survey in October 2020 stating that about 32.4 million homeowners have a home loan with a 0.75 percent higher rate than today’s average mortgage rate. That represents about three out of every four mortgage holders with a 30-year mortgage.

Not all of those homeowners are eligible to refinance due to their income, employment, credit scores or home value. However, there are millions of qualified homeowners who could save hundreds of dollars a month on their house payments. So why isn’t everyone doing it?

Many homeowners do not want to go through the hassle and the paperwork that refinancing requires. The process can be daunting and not everyone is prepared or willing to jump through the hoops. They forget that the lender is handing over a big sum of money and even the most loyal clients carry a risk for repayment. Be prepared for the significant time and effort involved in refinancing.

Do Your Homework

When it comes to interest rates and closing costs, mortgage lenders take into account credit score, income, assets, loan amount, and property value.

Know your credit scores since they affect your interest rate. The higher your credit score, the lower the interest rate. Many lenders recommend a credit score of at least 720 to qualify for the most competitive rates. Consider taking steps to improve your scores before refinancing.

If you are unsure about refinancing, choose a knowledgeable mortgage lender who can help you decide. Know what costs to expect and whether it makes financial sense for your situation.  [where: 75230]

Nov 27, 2020

Drawing the line - Texas Counties

One might think that a home in the city of Dallas would naturally also be located in Dallas County. And one would wrong. 

Your home may be located in Dallas and likewise in Collin, Dallas, Denton or Rockwall County. For many people in Dallas-Fort Worth, their next-door neighbor could be in a different county. The folks across the street might be in a different school district as well. 

Convoluted boundaries can make for some interesting scenarios of where the kids go to school, who your elected officials are, which police department you call, and where you register your car. Texas has 254 counties, more than any other state. We also have more incorporated cities and more school districts than any other state. 

Imagine a map of D-FW counties, overlaid with city borders, and then place the school districts on top of that. Try not to get cross-eyed.

There is a reason county, city, and school district boundaries don’t match up. When the Republic of Texas was established, boundaries of counties were vague and not precise. Rivers or creeks often defined them. Eventually the Texas Constitution set out policies to establish more consistent size and shape for new counties. The rules evolved into county sizes of about 900 square miles with the goal to be as square as possible. Ideally, the county seat is located near the center of the county. 

When it comes to town and city limits, many area municipalities have consolidated or split over the years. Often the reasons are economic. Texas school districts are independent and do not necessarily follow city or county borders. Over time, some school districts might have merged into one, while others split into unique entities. These actions have resulted in boundaries that look like a jigsaw puzzle.

Several DFW subdivisions lie within two counties. When the neighborhood was developed from farm and ranch land, county representatives decided where to draw the lines between neighbors. They agreed on who would claim which homes – and who would tax them.

Why does this matter? While your county tax assessor may collect your property taxes, you actually are paying property taxes to your county, city, and school district. Often the county collects all of your property taxes, making it easier to pay with one payment. However, that is not the case in every county, city, or school district. 

Many Dallas area homeowners write two or more checks to different entities for their property taxes each year. Your taxing authorities determine more than who collects your taxes, the location of your local library, or the identity of the local dogcatcher. The county that collects your taxes also maintains your property records. They record your deed and keep ownership records.

Your county is where you look for information about a piece of real estate. When you need to know more, just follow the money. The sheriff may not pursue you past the county line, but the school, city, and county tax collectors will.
[where: 75230]