What Are Construction-To-Permanent Loans?

Ready to design and build your dream home? A Construction-to-Permanent loan may be right for you. Essentially, it’s a three-stage mortgage that covers all of your new home’s construction costs. The Construction-to-Permanent (CP) loan allows you to lock in your interest rate and close the loan before you begin work on your home. When the project moves to construction, the bank disburses the loan to cover the cost, and the borrower pays interest on the outstanding balance. After construction, the loan becomes a permanent mortgage, and monthly payments begin.

 Here’s how CP loans work, step-by-step:

Application

A Construction-to-Permanent Mortgage Loan Originator (MLO) will go over several CP loan options with you and gather any appropriate documents needed for the application. They will submit the application on your behalf, and the MLO will let you know when the bank reaches a decision.

In the Meantime

There are several steps in the application process. One crucial step is the builder review. The bank may want to review the builder and their contract, which can affect their decision to issue the loan. The builder will need to sign a standard Construction Loan Agreement with the bank, which states the bank’s position on the funds available for construction. Also, a licensed real estate appraiser will look over your plans, specifications, the property itself, and any recent sales of homes like yours on the market and use this information to determine an estimated value of your home. During this stage, your builder, the bank, and yourself will need to agree on how loan disbursements and draws will be made in the form of a Draw Schedule. The bank will work with a closing agent of your choice to make sure the title on the property is clear and then move to close.

Disbursement

If approved, the bank will require an inspection before each disbursement to determine if the necessary work has been completed on the project. You’ll order an inspection by contacting your bank’s Paralender, who will then call a local inspector to look over the amount of completed work based on the draw schedule. Funds go toward labor completed and material installed.

Conversion

“Conversion” refers to the construction phase of your loan moving to the permanent stage. Costs that may be due at this time include the initial escrow of prepaid items such as homeowners’ insurance and taxes, prepaid interest for the permanent phase, unpaid interest on the construction phase, and other title insurance fees. Regular mortgage payments begin after the loan has been converted.

Potential investors and buyers shouldn’t feel intimidated by this process. Regions Bank recently collaborated with Built, a payment technology firm and construction finance software specialist. Built seeks to simplify the administration of Construction-to-Permanent loans by using a cloud-based portal that synchronizes the builder, inspector, and lender in one place. Using the platform, builders and developers can view availability, ask for inspections, review business analytics, and inspectors can submit reports about construction progress from the site, which speeds up the funding process. “Built is an online platform that makes it easy for the clients to order inspections when they are ready for them and to request draws,” said Nicole Dupre, Mortgage Loan Originator at Regions. “It’s a place that builders and homeowners can come to view the status of the project at any time.” Since its launch, Built has helped clients decrease their turnaround times by over 50%. 

If you have any questions about Construction-to-Permanent loans and want to find out how we can help you reach your homeowning goals, call us at (504) 581-6427. Homestead Title is a full-service title and escrow company. Since 1934, we have provided our customers with competent, thorough, and professional service. Before each closing, we search public records to clarify legal and financial risks for lenders, realtors, and other stakeholders in the real estate transaction process. Our energetic and capable team of real estate title professionals provides accurate investigations, rapid turnaround time, streamlined paperless delivery, and exceptional customer service. 

Yes, An Owner's Title Policy is the Best Way to Protect Your Home!

Though your first reflex may be to brush off buying an owner's title policy as you navigate your new home purchase, you should reconsider. Yes, you have your money and time tied up in so many other things that come with buying a house, but title insurance can protect all of the money you've put into the investment. 

"I don't want to spend extra on title insurance. What's the Big Deal?"

The big deal is that you may not know how title insurance works in the first place and may severely miss out on its benefits. Your mortgage lender's title insurance does not cover you. Also, title insurance isn't a recurring monthly payment but a one-time payment paid at the closing of your home buy. From then on, you're fully protected. 

The highest risk for buying a home without title insurance is the possibility of claims that may appear due to any issues with the deed. These claims range from the discovery that an owner didn't report the complete picture of the financials on one end and the surfacing of a forged deed on the other. Unknown heirs who hold previous claims can materialize to challenge ownership, not to mention any liens that may not have been appropriately reported. 

 "So What Do I Do?"

Take Title Insurance into serious consideration. Peace of mind aside, you will have your legal fees covered in the unfortunate event of legal challenges, and if the claim succeeds, then it provides a net to hold back any loss on your investment. Homestead Title is known for its guidance unique to each client and facilitating the particulars of purchasing title insurance and every other step of closing on a property along the way. We understand that buying a home is an anxious, confusing journey, and we're here to offer our expertise. If you'd like to discuss title insurance for your upcoming home or property purchase, reach out to schedule an appointment or call (504) 581-6427 to discuss your options. 

Check Your Roof Before You Buy - Your Homeowners' Insurance Policy May Limit Coverage

Homeowners' insurance policies are becoming more restrictive with roof coverage to limit the number of claims. Several insurance carriers refuse to renew existing homeowner's insurance policies on a residence with a roof 20 years or older. The house did not pass the insurance company's inspection, and the carrier required replacing the roof before renewing the homeowner's insurance policy. As of 2020, most insurance companies require all shingle roof systems over seven years of age to be replaced with new ones. The reasoning behind this new scrutiny is that insurance companies believe there could be unseen roofing issues that could potentially deteriorate the deck, exposing them to higher risks for additional claims. 

If you have a roof that is 20 years or older, you may not be able to renew your homeowner's insurance, and if your older roof is damaged, you may only receive cash value for your roof replacement. 

Your roof is the critical shield for the rest of the structure of your house. It is the primary defense against damage from the elements. Because the average cost of a roof replacement can be $15,000 or more, it is one of the costliest parts of your home. 

To avoid potentially paying out a high claim, your home insurer may review any of your roof's features. These include what type of roofing materials were used, the age of your roof, and its current condition at the time you file an insurance claim.  

Your home insurance rate may depend on your roofing material's cost and durability. Your premium may be influenced by whether you have the proper type of roof to withstand weather events in your area and how much the materials cost to replace your damaged roof.  

TYPES OF ROOF DAMAGE CLAIMS 

Homeowner's insurance policies usually cover roof damage caused by fire, vandalism, falling objects (such as ice and tree branches).and "acts of God" (hailstorms, hurricanes, and tornadoes). Whether your insurance carrier pays for damage caused by wind, rain, or hail will be determined by your policy terms and the age of your roof.

A roof leak may be covered in your insurance policy. However, insurance companies put the responsibility on homeowners to prevent leaks and subsequent damage. They believe that it's up to the homeowner to take the necessary precautions to maintain the property. If your roof leaks and you didn't fix it properly, your insurance company might deny coverage.

These are general ideas, and your case may be different. It is good to check with your insurance company to understand what is covered and not covered before a claim is needed for specific details about your home's coverage.

The "sudden and accidental" factor is essential. If a leak in your roof is due to old age or poor maintenance, your claim will probably be denied. Insurance companies work on the belief that home maintenance is the responsibility of the homeowner. If a roof leak happened over time, it could have been avoided. Your home insurance provider will more than likely deny such a claim, and you could see a higher premium in the future as well due to the mark on your claim’s history as well as the condition of the roof.

You need to know what your homeowner's insurance covers on your roof before beginning the insurance claim process. The timeframe by which an insurance company allows you to file a claim can depend on the type of damage and the company's policy. It’s best to contact your insurance company immediately when you suspect damage.

The best way to keep your home insurance rates down is prevention. Reasonable steps towards taking care of your roof to keep your home insurance premium under control include:

·      Maintaining your roof (clean your gutters and keep off debris)

·      Choosing the proper roofing materials for your area (a licensed professional can advise you on the best material choices). 

·      Making sure your roof is installed correctly (choose only licensed contractors to work on your roof)

·      Keeping all documentation (photos, receipts, and other documentation)

·      Look for your best home insurance rates  

Homestead Title is a full-service title and escrow company. Since 1934, we have provided our customers with competent, thorough, and professional service. Before each closing, we search public records to clarify legal and financial risks for lenders, realtors, and other stakeholders in the real estate transaction process. Our energetic and capable team of real estate title professionals provide accurate investigations, rapid turnaround time, streamlined paperless delivery, and exceptional customer service. For more information, call us at (504) 581-6427 and let us provide you with a smooth and efficient real estate closing.

Your Questions Answered About Refinancing

If you consider refinancing your home, you undoubtedly have some questions, such as How does refinancing work? What are the average costs to refinance? What are the title company's responsibilities?

The refinancing process may be a confusing experience if you've never been through it before. Here are answers to some of your questions:

HOW DOES REFINANCING WORK?

When you purchase a home, even though you have the full intention of making the mortgage payments, sometimes issues arise that keep you from making your financial obligations. Refinancing your home is a way to reduce your monthly mortgage payment. 

In the case of a divorce, you may need to refinance your home to remove your ex's name from the mortgage

Or on a positive note, you may choose to refinance because improvements in your credit score will now help you obtain a lower interest rate.

WHAT DOES "REFINANCING" MEAN?

A refinance loan is a second loan used to pay off the first one. When you refinance your home, it's typically necessary to pay off the original loan first. 

WHAT ARE THE AVERAGE CLOSING COSTS TO REFINANCE?

The closing costs of a refinance are between 2 and 5 percent of the loan. That means a 15-year-fixed mortgage at 2.35 percent will cost approximately $660 for each $100K borrowed. That said, many different factors can impact the price, from the type of loan you are seeking to your credit score. It's important to remember that each case is unique. 

DOES REFINANCING MEAN I GET A NEW TITLE? 

When you decide to refinance your home, the first thing your title company must do is search the public records to confirm ownership. In most cases, you will not be issued a new title at the end of the process. 

An owner's title policy is purchased at the original closing. For each separate loan transaction, you can purchase a loan policy. Once you are confirmed as the current property owner, you will be able to submit your owner's title policy to your title company to acquire a reissue credit.

A new title is only provided at closing if the "current vesting" (the property owners' name) changes. For example, if your new mortgage doesn't include your ex-spouse's name, you will need a new title.

WHY DO I NEED TITLE INSURANCE ON A REFINANCE?

First, it is essential to understand that title insurance is significantly less costly than many other types of insurance policies you might buy. That's because instead of paying a monthly premium, you pay a one-time fee at the time of the closing. In return, you get proof that you are the legal owner of your property. This ensures that past events (even ones you are unaware of) can not result in the loss of your ownership. Additionally, it is customary for both lenders and owners to purchase title insurance at the closing, so each party to the loan is protected. 

Mortgages are backed by securities. That's why investors must be confident that the title is "free and clear" of all encumbrances. Title insurance provides your lending institution with this confidence. Without title insurance, it would be too challenging to back mortgages with the necessary assets, and investors would be too wary of the risk. 

WHAT DOES THE TITLE COMPANY DO? 

The first responsibility of a title company is to conduct a title search to establish the legal property owner. This process may also reveal information that the lender might find relevant. For example, the title search may indicate that the property owner has had a judgment filed against them. If this is the case, the lender could require the owner to pay the judgment before starting the refinancing process.

Title companies are typically involved in the closing. When a lender has reached an agreement with a property owner and is ready to provide them with a loan, a title company will prepare a settlement statement. This document explains how the loan funds will be disbursed to the borrower. It also will show how the funds will be used. For instance, if a loan is being issued for the payment of several bills, the settlement statement will list them accordingly.

Sometimes the title company is involved in the disbursement of funds as well. There are instances when a lender will provide the agreed-upon loan to the title company instead of directly to the borrower, which often happens when the settlement statement includes other parties besides the borrower, who are also entitled to payment.

In general, the title company may also serve as a liaison between the various parties involved in refinancing. These can include not only borrowers and lenders but attorneys, surveyors, government employees, and more. Because refinancing can involve many steps, with many issues to resolve before closing can occur, it helps to have an intermediary who works with everyone to move the process along smoothly.

That's one of the primary reasons for working with a title company during refinancing is beneficial to all parties involved. By assisting in key steps and coordinating with various organizations and individuals, title companies ensure refinancing is more efficient.

At Homestead Title, we understand that refinancing a home can seem like a lengthy and overwhelming process. Every step of the way, we work with all relevant parties to help make it easier. To discover more about what we can do for you, contact us today.

Correcting Misconceptions about Title Insurance

Before you started the process of purchasing your first home or commercial building, you probably had never heard of title insurance. As with the rest of what is involved in real estate transactions, title insurance can be challenging to comprehend. Title Insurance is often surrounded by misconceptions that keep most people from recognizing its importance.  To help you understand the importance of title insurance and how it relates to protecting your rights of ownership, here are a few misconceptions we would like to correct:  

Misconception # 1 Title insurance provides insurance coverage to protect you from financial loss related to a defect in the status of title to the property. 

If it is later discovered, that you do not own what you thought you purchased, or if someone else is claiming an interest in your property, title insurance may make you whole. Your title insurer may file a lawsuit on your behalf, take steps to remove the defect, or pay you money for your losses associated with the defect in title. 

Misconception # 2 The title search will protect me from title defects

Before signing the real estate transaction and early in the real estate purchasing process, a title search will reveal the property's history to uncover any issues that could limit your right to purchase. There may be hidden title defects, even after a detailed search of public records. Title defects include a disagreement in the record regarding the property's boundaries, easement/tax liens/easements on the land, forged signatures, claims by ex-spouses, and recording errors. These title defects may remain undiscovered for months or even years after you purchase the home. The title search reveals the problems. However, title insurance protects your rights of ownership against these defects.  If you think you don't need title insurance, think again. In 2018, title insurance policyholders filed over 730,600 claims with the American Land Title Association. The title industry spent over $615 million defending policyholders' rights and compensating their losses due to covered title defects. 

Misconception # 3 There is only one type of title insurance

 The two types of title insurance policies are the owner's policy and loan policy. An owner's policy protects you, the property owner, against loss or damage if there is a covered title defect in your right of ownership to the property. If you obtain a mortgage loan to purchase your home, your mortgage lender may require that you purchase a loan policy, also known as a lender's policy. This policy protects the lender's interest in the property until the mortgage loan is paid off in full. The loan policy provides no coverage to the property owner.  You can opt for more enhanced coverage within your owner's policy. Standard coverage protects you against financial loss and related legal expenses for common title defects that existed before you purchased a title insurance policy. Enhanced coverage includes the standard coverage and additional protection to cover matters that may transpire after the policy's date. 

Misconception # 4 Cash Sales Do Not Require Title Insurance  

 An all-cash purchase eliminates the requirement of a mortgage loan and reduces the need for lender's title insurance. However, an all-cash transaction does not eliminate the risk posed by unknown title defects. An owner's policy protects you against possible loss or damage from a covered title defect. 

Misconception # 5 Title insurance is too expensive

 The one-time premium for an owner's title policy is based on your home's purchase price and accounts for only a small percentage of your closing costs. Coverage will be in place for as long as you and your heirs own the property. When you add up the benefits compared to the costs, an owner's title insurance policy is quite reasonable. Unlike most insurance policies, there is no monthly or annual premium. Title insurance is a one-time cost you pay at closing when you purchase or refinance the real property. 

Misconception # 6 You get the same protection from homeowner's and title insurance  

 Title insurance protects a buyer's right to ownership and a lender's investment. On the other hand, homeowner's insurance is a policy that protects you against potential losses or damage you can experience to the structure of your home or its contents during an insurable incident. 

Misconception # 7 Homebuyers are not able to choose their title company

 Under the terms of the Real Estate Settlement Procedures Act (RESPA), the buyer has the right to choose the title company. Generally, the property seller will not require the buyer to purchase title insurance from any specific title company unless it has been instructed that the seller will pay for the owners' and lenders' policies associated with the real estate transaction. 

With so many misconceptions about title insurance, finding a team of professionals that you can trust is imperative. At Homestead Title, we are committed to providing quality service and being there for you if your property rights are threatened. To learn more about title insurance, contact us today.               

Homestead Exemptions In Orleans Parish - What You Need to Know

As of January 1, 2012, if you reside in Orleans Parish, the Homestead Exemption you receive on your property will be permanent for as long as you own your property and declare it as your domicile. Once you have successfully applied for a Homestead Exemption, you will no longer need to reapply annually.

For every home, there can only be one homestead exemption. As of August 2016, it is a punishable crime according to state law to claim more than one homestead exemption.

Every homeowner in Orleans Parish can claim an exemption from property taxes for the first $75,000 of the value of their "domicile" or the home they occupy as their primary residence, guaranteed by the State

Constitution. As of 2017, for those declared 100 percent disabled by the U.S. Department of Veterans Affairs or the surviving spouse of a veteran, policeman, fireman, or state trooper killed in the line of duty, the exemption is for the first $150,000 of a home's value. 

AGE, DISABILITY, VETERANS

Homeowners 65 years of age or older, may qualify for a Special Assessment Level (SAL) if they meet certain conditions. You must be on permanent disability, be the documented surviving spouse of a member of the Armed Forces or Louisiana National Guard who was killed in action, is missing in action, or is a prisoner of war. The SAL places a "freeze" on the property's assessed value, even though the appraised value may fluctuate with the market.

HOW TO FILE FOR A HOMESTEAD EXEMPTION:

To claim a Homestead Exemption, all owners who occupy the property must appear in person at the Assessor's Office and present the following documentation:  

1. Proof of ownership (either an Act of Sale or Warranty Deed);

2. A valid Louisiana Driver's License or Louisiana State I.D. (address must match the property's address on your application);

3. A current unpaid Entergy bill for the property, (service location and mailing address must match) showing a standard residential usage; OR

4. A landline telephone bill or cable bill (Direct, Dish, or Cox).

Note that your Sewerage and Water Board bill will not count towards proof of residency.

100 PERCENT DISABLED VETERANS EXEMPTIONS

To claim a Homestead Exemption for a 100 percent Disabled Veteran,

you must show the following: 

1. Proof of ownership (either an Act of Sale or Warranty Deed); 

2. Proof that the owner qualified for the current year's Homestead Exemption; 

3. 3. A valid Louisiana Driver's License or Louisiana State I.D. (address must match the property's address on your application);

4. 4. A current unpaid Entergy bill for the property, with service location and mailing address being the same, showing standard residential usage; OR 

5. 5. A letter from the Veterans Administration (V.A.) which states the veteran owner is 100 percent disabled. 

WHAT IS AN AGE FREEZE AND HOW TO QUALIFY 

An Age-related abatement or "age freeze." 

To qualify for an age-freeze, the homeowner must be at least 65 by August 1 in the year preceding your tax year. You must also meet certain income restrictions. Note that the maximum qualifying income for an age freeze changes annually—Call 504.658-1300 to verify the current maximum. Once successfully gained, the age freeze will be permanent, and you will not have to reapply for it on an annual basis.

Age-related abatements or "freezes" must be documented by:

1. A valid Louisiana Driver's License or Louisiana State I.D. (address must match the property's address on the application);

2. Proof of annual income: 1040 adjusted gross income of the prior year's income tax return or Social Security award letter for individuals with no income or job.

 At Homestead Title, we handle the coordination of all parties of interest so that your refinancing runs efficiently. We also take the time to ensure that all documents are in order, so that you will experience a “smooth road” to refinancing. Call us today at (504) 581-6427 if you have any questions or would like further information on how we can help you. 

A Title Company’s Role in Refinancing - A Quick Guide

Despite your original commitment to timely mortgage payments, unexpected difficulties can create hardships. When these problems take you by surprise, refinancing may be an option for you to try and lower your mortgage payments. Communicating with your lender will definitely assist you in your search for a lower interest rate.

Refinancing a home can be overwhelming to those new to the process. In accordance with our commitment to thorough and competent service, we'd like to offer the following quick guide to refinancing.

In loan refinancing, you are addressing the outstanding original loan by using a new loan to pay it off. Closing costs for refinancing can range from anywhere to 2-5%, with the average being 1.5%. Your interest rate, credit score, and type of loan are among the chief factors that determine your payment. 

During refinancing, you or your lender will choose a title company for research purposes. The title company’s responsibility is to determine that you are, in fact, the owner of the property. This evaluation is normally completed through a title search. The title company is also looking for factors such as outstanding judgments that the lender could ask to be paid before proceeding with refinancing.

Those who choose to go forward with refinancing may be curious about title status and have questions about title insurance.

* Title insurance isn’t paid through monthly premium, but instead by a one-time fee at closing. The lender seeks protection through title insurance at the time of closing. 

* Title insurance promotes investor confidence as mortgages are security-backed. Investor risk is minimized through title insurance.

The lender will provide you with a closing disclosure, which outlines how the loan will be disbursed and used. Ultimately, a title company acts as a go-between, or intermediate party, for all of those involved in refinancing, ensuring the process is free of headaches. 

 At Homestead Title, we handle the coordination of all parties of interest so that your refinancing runs efficiently. We also take the time to ensure that all documents are in order, so that you will experience a “smooth road” to refinancing. Call us today at (504) 581-6427 if you have any questions or would like further information on how we can help you. 

Why You Need Title Insurance!

Title insurance is one of the very best investments you will ever make for your residential or commercial purchase. When a title defect occurs, it can involve the loss of money to defend against an adverse claim or to hire a lawyer to fix the problem. Potentially, it can lead to the loss of the property. Title insurance provides a way of covering those risks, and it doesn't just protect you directly, but lives on to protect your investment and loved ones in the future.

COMMON TITLE PROBLEMS

• Money judgments

• Bankruptcy

• Open mortgages in the Chain of Title

• Minors mortgage

• Interdiction

• Deceased on title

• Absentees on title

• Tax sales

• IRS and State Tax Liens

WHAT IS TITLE INSURANCE?

• A title insurance policy is an insured statement of the condition of title, or ownership, of real property.

• Title insurance is unlike any of the traditional forms of insurance: it is concerned with risk elimination.

• Title insurance does not insure against the possible happening of a known and designated future event such as a fire, accident or death.

• Title insurance is a contract of indemnity and the issuer must provide reimbursement to its beneficiary in the event of the occurrence of certain conditions specified in the policy.

• Title insurance protects you from anyone who shows up out of the blue demanding money or even the right to use your property.

The best part of title insurance is that it is usually purchased at closing as a one-time cost. That cost is regulated by the state — meaning service is paramount when choosing a title company. With our history and experience, we are one of the best service-providers in the state, and we strive to give our clients the most up-to-date information regarding their individual transaction. We’re here to offer guidance or even a listening ear should any issues arise in the closing process.

REMEMBER, TITLE INSURANCE

• is available for residential and commercial transactions

• protects you from loss of property and money

• can be included as a one-time cost during closing