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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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Nick Duzich
Hirschi Realtors
3631 Maplewood Ave., Ste. 1
Wichita Falls, TX 76308
Cell: 940-224-1224
Fax: 940-691-1213
Email:
NDuzich@HirschiRealtors.com
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We had such a great experience with Nick Duzich! We were very picky about finding the perfect house and he went above and beyond to make sure we found "The One" Thank you Nick for all your hard work. David & Lindsey Cadaoas, Wichita Falls, TX
Nick was most instrumental in selling my house. For every possible roadblock he was very resourcefull in helping me find a low cost and efficient way to overcome the difficulties. I would recommend Nick as an excellent agent to anyone wanting high quality services. I am greatful for all he did in selling my house Nancy Terry
Nick Duzich was very aggressive when it came to selling our house. We were in the process of being transferred to Corpus Christi and our family was split up. He knew this was a difficult time for us. Nick went above and beyond to make sure to market the house. We had lots of showings and he made sure it was advertised everywhere. It was non stop interest. We had to be on our toes with all the requests and showings. Nick did an amazing job and we were in contract within 3 weeks. Nick was always there for us and went above and beyond to help in any way he could. He is very professional and trustworthy. Nick treated our house with respect. He was very helpful and very easy to communicate with. Talking to him is like talking to a friend. You feel like you have known him for years. I would recommend Nick to anyone who is looking for a realtor who will come into your home and sit down with you and listen. He is definitely there for his clients and he will treat you like family. This was the easiest transition in all my house buying years.  The Wallanders, Wichita Falls, Texas
Nick was very intuitive to our needs. He made sure since we were moving from 6 hours away to get us in a neighborhood that would best fit with our needs. Nick is so easy to communicate with. His way of being friendly helped us communicate better with him. We would recommend him to anyone shopping for a home! Melissa Colclasure
We loved our experience with Nick and Hirschi. We love our new home and wouldn't have been able to go through everything as smoothly as we did with out him. He was friendly and easy to deal with. He is very personal and paid attention to the details we required in searching for our new home. He is a people person and cuts to the point, we trusted his opinion about how to handle the purchase. Thanks Nick! Brandi H.
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