Creative financing: You’ve heard of it, and, as a seller, the idea sounds pretty attractive. But, do you know everything you need to know about carrying back a second; essentially, about becoming a lender? You better know the same things that financial institutions know - you better know about lender’s title insurance.
It’s time to sell your $150,000 home, a home that you have owned for fifteen years, a home in which you have substantial equity. The loan terms call for a $20,000 down payment from your buyer, a new $100,000 loan from a local savings and loan, and for you, the seller, to carry back a note for the remaining $30,000.
Will you, the seller, need title insurance?
Yes, you will. Everyone who retains an interest in the property needs title insurance. When you took on the role of lender, you retained a record title interest which you will want to protect for the term of the loan.
But, why would you need lender’s title insurance when the repayment of your loan is assured by a lien in the form of a recorded deed of trust against the property? What could possibly go wrong?
You must insure yourself for the same reason that financial institutions obtain title insurance - for the protection of your investment. You must be assured that your lien on the property cannot be defeated by a prior lien or other interest in the property, which, if exercised, would wipe out your security.
Anything that involves the new buyer’s ownership rights to the property is of direct interest to you because you are holding the second mortgage. If such ownership rights are in question or defective, you may have trouble collecting your monthly mortgage payments. But, you say, there is nothing in your property’s history that could cause problems: no problems with easements, no problems with boundaries, no problems with rights-of-way.
Contrary to what may be popular belief, these matters are not the only source of title problems; a large proportion of title problems arise out of man’s interaction with man. The fact of a marriage, a divorce, a death, a forgery, a judgment for money damages, a failure to pay state or federal taxes - these occurrences can and usually will affect your rights as a mortgage lender.
As an example of what can befall the lender, did you know that a federal tax lien recorded against your buyer before the loan transaction is concluded may result in the loss of security in your home? Sophisticated mortgage lenders are aware of this possibility as well as many others which could jeopardize their loan security and seek the protection afforded by a lender’s title insurance policy.
If you are considering carrying back a second, be sure to get all the facts regarding the benefits of lender’s title insurance. Your local title insurance company should be happy to provide the information you need.
Metro Brokers Of Oklahoma
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Cindy is the utmost professional bringing all her expertise but also a personable, friendly perspective during a house hunt. She helped us look ALL DAY LONG and gave us terrific advice and feedback. She helped us purchase our dream house and we highly recommend her. We hope to stay in this home forever but if we ever did move again, there would be no doubt who to call.
Julia Wagner Leinen
Cindy was such a blessing to my husband and I when we were looking to buy our first house. She carefully sought out houses and neighborhoods that's would fit our needs. She gave us multiple options and was always available when we had questions. When we finally decided on a house, she did an awesome job communicating with the sellers, and working out a great deal for us! I thought buying a home would be so stressful and hard because we are young and don't know much about real estate. But with Cindy, it was a breeze and an exciting process! I can't think of anyone else I would rather have partnered with when looking for a home for my family!
Mike and Kaci Moore
Cindy is a superb realtor and guided us through every step of the home-buying process with the upmost professionalism. She was easy to reach and always kept us updated on the status of our paperwork. We couldn't be more be pleased with Cindy and recommend her without hesitation to anyone wanting to buy or sell a home.
Brian and Maria Sargent
Cindy was so easy to talk to & made us feel comfortable as she walked us through the processes step by step. She updated our education on Oklahoma properties. When I was fretful, she would remind me that God would lead us to the right place. After a snafoo after closing, she jumped at the chance to make things right. Thank you, Cindy! Don and Sue Ann Wagner
I know she's my mom, but she worked her hinny off helping Brandon I buy a house in 2013! She was so patient and helpful! Brandon and I didn't know the first thing about buying a house, credit, or anything and she walked is through it!
Brandon and Ashley Kirby