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Creative Financing

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.

Article by CLTA

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Hello Janet, I just want to send a short note to thank you for your assistance in my purchasing the Lacey Street home. As you are aware, Gary and I had significant problems in finding a "qualified" real estate agent. When we found you, you made everything so easy..........you were very prepared.........you went way out of your way to assist us, even after the property was purchased. Things could not have gone smoother. Thank you for everything you have done. Mark Madding
Janet, My husband and I would like to extend our heart felt thanks to you for selling our home in Glen Lakes. We had previously listed the property without success. You provided us the necessary information to appropriately price our home and the home sold in a record 17-day period. We were thrilled with your results and would highly recommend your services to our friends. Thanks again so very much for your attention to detail and immediate success in selling our home. Kindest regards, Kevin and Natale Goff
Virginia, You went above & beyond to help make our dreams come true, making our first reality a paradise! to the first potential "yes" homes to home you were with us every step of the way. You truly do make miracles happen. Thank You for all of the prayers. Thank you from the bottom of our hearts. Brenda and Billy Lummus
Thank you for the efficient and speedy way you handled the sale of my house in Glen Lakes. Although I never met you, I feel as though I've made a new friend. I could tell in our phone conversations that you had my best interests at heart and worked quickly to find a buyer who was just right for my home. Your friendliness and the way you kept me informed about the way things were going impressed me. I really appreciate the promptness of the finalizing and your willingness to help make details clear to me. May God bless you with good health, success and prosperity in the future. It was a joy to work with you, my friend! Sincerely, Mona FayeLewis
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Thank you for visiting today. If this is your first visit, take your time and look around. We have plenty of information and resources available to you. If you are a return visitor, thank you. We would love to hear from you. We can serve all your real estate needs.