A Simple Guide to VA Loans

In addition to the many civilian loan options on the market, there is one lending opportunity that only military service members can take advantage of, which is a government loan backed by the Department of Veteran Affairs (“VA”). Even with an imperfect credit score, active service members, veterans, and surviving spouses can qualify for this loan category. 

The main benefit of this loan is that the VA will guarantee the loan and will pay the lender a certain percentage of the principal in the event of default. Here’s a breakdown of the types of VA loans and information on who qualifies:

Types of VA Loans

The VA Cash Out Refinance Loan allows borrowers to replace their current loan with a new one under different terms. You can take case out of your home equity or refinance a non-VA loan into a VA-backed loan.   

A VA Purchase Loan is similar to a standard mortgage. If you choose this option, you’ll be able to buy a property with no down payment. Specific terms may differ according to the lender. 

The VA Native American Direct Loan (NADL) is designed for Native American veterans or veteran spouses of Native Americans. It allows borrowers to purchase, construct, or renovate a home on federal trust land. 

Who Qualifies? 

VA Loans have no down payment, less strict credit requirements, and are available to service members, veterans, and military spouses who meet one of the following conditions:

 - Borrower has served 181 days of active service during peacetime

 - Borrower has served 90 days in active service during wartime (consecutively)

 - Borrower has served 6 years in the National Guard or Reserves

 - Borrower has served 90 days in the National Guard or Reserves under Title 32, with at least 30 consecutive days served. 

 - Borrower is a spouse of a service member who died in the line of duty or because of a disability from their service.

To prove that you are eligible, you’ll need to obtain a Certificate of Eligibility (COE) that connects to proof of your service. The VA’s eBenefits portal allows you to apply for this online. For surviving spouses, you can find more information on what you’ll need to do to get a COE using this information available on the VA’s website.

If you have any questions about VA loans and eligibility requirements, 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. 

What are Mechanic Liens and How to Clear them from Your Title

A mechanic’s lien is a common but easily preventable occurrence for many Florida property owners. This type of lien is filed against a property when a contractor fails to pay one of their suppliers, subcontractors or laborers for property improvements.

The mechanics lien is a cloud on the property’s title and can prevent or delay the sale or refinancing of the property until the mechanic’s lien is paid. 

Often a mechanic’s lien is discovered long after it’s been filed in the public records, but by taking a few proactive measures in accordance with Florida’s Construction Lien Law, property owners can ensure their properties are protected from the burdens imposed by such mechanic’s liens.

Notice of commencement

File a Notice of Commencement before beginning any home construction or remodeling project. Record the form with the Clerk of the Circuit Court in the county where the property being improved is located. Post a certified copy at the job site, too.

The Notice notes the property owner’s intent to begin improvements, the location of the property, description of the work and the amount of bond (if any). It also identifies the property owner, contractor, surety, lender and other pertinent information. 

A property owner who fails to record a Notice of Commencement or incorrect information on the Notice could result in having to pay twice for the same work or materials.

Request a list of all subcontractors and suppliers who have a contract with the contractor to provide services or materials to the property.

Releases of lien

Prior to making any payment, the property owner should receive a Release of Lien from every supplier, contractor and subcontractor, which covers the materials used and the work performed on the project. The Release of Lien is a written statement that removes the property from the threat of lien.

If the contract requires partial payments be made before the work is completed in full, the get a Partial Release of Lien covering all workers and materials used up to that point in time.

Before final payment, obtain an affidavit from the contractor that specifies all unpaid parties who performed labor or services, or provided materials to the property. Make sure the contractor obtains releases from all of these parties before making final payment.

Notice of termination of notice of commencement

At the end of the project and after the contractor is paid in full and obtained all of the necessary Releases of Lien and affidavits as described above are obtained, file a Notice of Termination of Notice of Commencement with the Clerk of the Circuit Court in the county where the property being improved is located.

13 Steps to a Successful Real Estate Closing

The term “real estate closing” includes a process of specific steps in the home buying process. From the time that the buyer and seller reach a purchase agreement until the time of the closing,  there are several steps that should be followed to ensure that the property's ownership is transferred lawfully and smoothly. 

Here are thirteen steps to a successful real estate closing: 

1. Set up an escrow account: Escrow is when a neutral third party retains the funding and documents involved in the closing process to ensure everything is accurate in the transaction before it is complete. Escrow protects the buyer and seller during the home purchasing process.

2. Determine Property Ownership: In order to determine and confirm a property’s legal ownership, there must be an examination of public records to determine if there are any claims on the property. A title search entails a search for deeds, contracts, and other documents to make sure the title is "free and clear" of any defects.

3. Purchase Title Insurance: Title insurance protects the insured from financial loss related to the title of the property. There are two policies at a home loan closing: the lender’s policy, and an optional owner’s policy. Lenders require title insurance to protect their interest in the loan. Owners have the option to purchase title insurance to protect themselves from title defects that arise after the closing that could at the least incur legal fees and, in the worst-case scenario, may result in a loss of the property. Both are a one-time upfront fee.

4. Hire a closing attorney: There are numerous legal documents that must be signed during a real estate closing and some can be complicated. Buyers and Sellers often hire a real estate closing attorney to help protect their interests, to address any issues at the closing immediately, and to ensure all the appropriate closing documents are filed with the proper state and county authorities.

5. Get pre-approval for your mortgage: A mortgage pre-approval prior to your real estate closing shows the sellers that you have your finances in check and that you won't be denied a mortgage if they decide to sell you their home. Pre-approved loans help the closing process move faster, and often lenders will offer to lock in a lower rate to facilitate a smooth closing.

6. Determine closing costs: Closing costs may include fees related to the origination and underwriting of a mortgage loan, real estate commissions, taxes, insurance premiums, title, and record filing. Escrow companies will often charge a service fees for managing your closing process. Prior to your real estate closing, you should carefully review the itemized list of charges.

7. Schedule a home inspection: Many home buyers include a home inspection contingency in their purchase contract to ensure there are no surprises. Standard inspections include a review of the heating and cooling system, interior plumbing, electrical systems, roofing, doors, windows, walls, and foundation.

8. Renegotiate the offer: You can often renegotiate your purchase offer with the seller if the home inspections revealed any issues. If the seller does not agree to drop the purchase price or to pay for any necessary repairs, the buyers can choose to withdraw their offer and still be protected under the home inspection contingency.

9. Secure the mortgage interest rate: If the rate of mortgage interest was not locked in through the pre-approval process, the buyer should do so during the closing process. Interest rates fluctuate daily, so you should monitor rates to lock in the lowest rate possible.

10. Lift real estate contingencies: Any real estate contingencies that were put into place must be removed in writing before your scheduled closing.

11. Placing funds in escrow: To finalize your real estate purchase, you will need to deposit your down payment and pre-determined closing costs into an escrow account. Usually, a wire transfer of funds or a cashier check is required.

12. Do a final walkthrough: Before the date of closing and any final paperwork is signed, homebuyers should do one last walkthrough of the property.

13. Sign Closing Documents: On the date of closing, the buyer and seller's parties will meet in-person to make final payments, sign the legal documents, and officially transfer ownership of the property. 

Homestead Title is a full-service title and escrow company. Since 1934, we have provided our customers with competent, thorough, and professional service. Prior to 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. 

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.               

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. 

Real Estate Closings During COVID-19 – Keeping You Safe

Before COVID-19, real estate closings primarily involved all parties to a transaction sitting around a conference table as participants signed and passed around dozens of documents. Now with physical-distancing protocols in place, attorneys, lenders, and title company representatives have had to adjust to the new normal.  Remote closings and E-closings are a hot topic in real estate and title circles nationwide. In Louisiana, while remote notarization is available temporarily under the state emergency guidelines, most lenders are still not accepting documents executed via remote notarization. However, more and more lenders are moving towards a hybrid approach that saves time and paper at the closing table. 

Unlike a face-to-face closing where real-time issues can be addressed; hybrid closings take a bit more preparation and coordination on the front-end. The majority of documents can be delivered and signed electronically, however at the minimum, the Closing Disclosure, Deed, Mortgage, and Note still must be “wet-signed” in person in front of a notary and two witnesses. 

With COVID-19, title companies have had to adapt quickly to protect both clients and employees. Many, like Homestead Title, have adjusted their procedures to allow the notary and witnesses to meet the parties outside, and often parties remain in their cars to sign documents. In some cases, notaries have even brought documents to a party’s home for an outdoor signature and then brought the document back to complete the transaction. After the transaction is complete, copies of documents are being sent electronically to each party instead of hard copies being given at the table. 

At Homestead Title, the health and safety of our clients and employees are of the utmost importance to us. We are following the CDC guidelines and monitoring the changes during the pandemic. We will continue to take precautionary steps to protect our clients and to ensure that whether you are buying or selling a home, we are here to help you do so, safely. 

In order to make face-to-face closings more convenient, Homestead Title has three offices: New Orleans at 1201 S. Carrollton Ave. 2nd floor, Mandeville, at 1070-B W. Causeway Approach, and Harvey, at 1901 Manhattan Blvd. Building D. We also have multiple locations throughout Metairie and New Orleans area where we can bring the closing to you!