When most consumers purchase a home, they obtain conventional financing for the purchase. This often takes the form of a 30-year, fixed rate loan. In order to secure the loan made to you, the bank files a mortgage with the register of deeds. This document tells the world that the bank has a first-place lien against the house and if any other creditors file a lien, that lien will be inferior to the first-place loan. Now, let’s say that the same homeowner would like to make improvements to their home, add a pool or build a garage and would like to borrow additional money to do so. The homeowner may also want to borrow funds for reasons unrelated to the home such as consolidation of credit card debt, assisting a child with college tuition or a business venture.
So, rather than to refinance the entire home loan and file a new mortgage, etc, to account for the increase in the loan, a bank will often file a second mortgage. This can also take the form of a home equity line of credit type mortgage (HELOC) which is also usually a second mortgage as well. The difference is typically the bank will automatically release a second mortgage upon payoff. With a HELOC, the bank will keep the mortgage filed and the note open to allow a consumer to re-advance funds as needed. Only upon request of the homeowner will the bank release the mortgage upon payoff. This saves the costs and expense of making a new loan every time a homeowner wants to borrow funds.
HELOC’s and second mortgages can be obtained with the bank that made the first purchase loan or with a different institution as selected by the homeowner. The bank handling the loan will usually order title insurance to insure that the mortgage is secured against all liens, besides the first place mortgage. If a consumer with a second place mortgage or HELOC later decides to sell the real estate, the title company simply pays off the second mortgage the same as it pays the first at closing. The only additional step is to request additional payoff information. Of course, there are many different types of second mortgages and HELOC’s. it is a good idea to discuss options with a finance professional.
Here at Tallgrass Title, we deal with second mortgages and HELOCs on a daily basis. Should you have any questions during your purchase, sale or refinance, feel free to contact our title professionals. We are here to help, its our job!
In the early stages of the closing process your closing agent will put together what we call a Deed Packet for the Seller to sign. The deed packet consists of many of the documents we need to close your real estate transaction. Not all deed packets are the same.
However, all deed packets will consist of at least a Deed, an Affidavit as to Debt, Liens and Indemnity, and a Seller 1099 Information Sheet used for taxes at the end of the year. Additional documents as needed will often appear. If there is a current mortgage, your closing agent will ask for an information release. This is so our office can receive a current payoff on any existing mortgage. There may also be other affidavits to clear exceptions from the final policy. If you are working with a realtor, there will be documents authorizing Tallgrass Title to pay the realtors at closing or to give your realtor permission to sign documents on your behalf. New to our deed packet is a Proceed Instruction Sheet that instructs us how to deliver the proceeds due from your sale.
As a Buyer, you may receive inspection invoices or invoices related to work performed on your new home. It is equally important for our office to receive invoices as soon as they are available. Your closing agent needs these invoices to ensure that all the work done on the real estate is paid in full and there are no outstanding liens attached to your real estate.
Returning the signed deed packet and forwarding invoices as early as possible helps make the closing process go smoothly. Your closing agent will then have time to prepare for the closing and to get ahead of any issues that may arise.
Tallgrass Title is here to help in any way we can to stream-line the closing process for you. We offer courier and notary services to our clients and are available for any questions you may have about the closing process. If for any reason you or your realtor are unable to come to our office to deliver a deed packet we are more than happy to come to you. That’s our job!
In the current, fast-paced world, people often times find it difficult to be present at a closing. Perhaps a work or vacation schedule prevents a person from being present at a real estate transaction. Military personnel are often times deployed overseas. Often times folks are forced to relocate quickly and must sell their house from afar. For these and many other reasons, a power of attorney may be the right tool for a closing.
Simply put, a power of attorney is a document that gives a person the authority to do certain acts on your behalf. This person is often referred to as the “power of attorney” or “agent.” In a real estate transaction, this is commonly done with a “limited power of attorney.” This allows the designated person the limited authority to sell or purchase real estate on behalf of a person. The power of attorney document is signed by the person giving the authority prior to the real estate closing. The designated individual provides the document to the title insurance or closing agent. At the closing, the power of attorney simply signs for the absent person.
However, it is important to remember a couple of points to avoid delays or confusion at the closing:
- Plan on having the power of attorney prepared well before closing. Often times the individual signing the document will be overseas. This will require finding a notary or equivalent at a consulate’s office. If in the United States, but simply unavailable, a notary will need to sign the initial power of attorney. Also, an original power of attorney will be needed for the closing.
- Let your real estate agent, title insurance agent, closing agent or banker know as soon as possible that you are using a power of attorney to close. It is extremely important that these individuals know about the presence of the power of attorney in order to prepare the closing correctly. Failure to let these individuals know of that fact could delay closing.
- If the power of attorney is being used to sell a principal residence or “homestead,” Kansas law dictates that specific language be added to the power of attorney. If the language is not present, the power of attorney may lack the proper authority to complete the closing.
- Have a real estate professional assist you with the form. The power of attorney document and its requirements can often appear daunting and confusing. A real estate professional can assure that the document is completed correctly and prevent a delay in closing.
- Decide who will be your power of attorney. Often times this is a stateside spouse, real estate agent or family member. It is important that this person be trustworthy. After all, the family home is most Americans’ largest investment. You do not want just anybody handling this transaction for you.
Tallgrass Title is also happy to assist in the preparation of the power of attorney to ease the closing process. Our office has seasoned real estate attorneys on staff that have prepared countless power of attorney documents for every type of real estate transaction. Additionally, our attorneys are available to answer questions regarding the power of attorney. With a little pre-planning, a seemingly daunting and confusing situation can be made easy.