Frequently Asked Questions

General Title Questions

What is Title insurance?
Title insurance is a policy that protects real estate owners and lenders against losses from claims against their ownership. It originated in the 1870’s, creating a recording system for public land records and replaced individual searches of public titles and records that provided no guarantee of clear title.

Today title companies are involved in all aspects of the closing process from searching and clearing property title through the preparation and recording of documents and collection and disbursement of funds. The title company provides a secure environment for the seller, buyer and lender in a real estate transaction.

How long will it take? Or Where is my title policy?
We take pride in providing speedy and accurate search services, but accuracy must take precedence over speed when a mistake could cost you your most valuable asset. Each title search is unique. Approximately 25% of searches reveal problems or “defects” in the title which must be resolved before closing and may take some extra time.

How much will it cost?
Many factors affect the cost of title insurance including the value of the property and the types of coverage or endorsements you will require. Please feel free to contact us to review your specific needs.

Where will the closing take place?
Freedom Title offers you a choice of almost anywhere you wish. We have several locations available for your closing listed on this page. We would also be happy to come to your office. Our closers will be available at the location most convenient for you.

How do I request a policy from Freedom Title?
We are happy to accept your order any of two ways – by phone at 1-847-797-9200; or by completing our online submission form click here.

What if I have a question?
If you can not find the answer to your question on our website, please either call us at 1-847-797-9200 during regular business hours or email us directly from our Contact Us page.

What is HUD?
HUD is the Department of Housing and Urban Development a US government agency which regulates real estate transactions. HUD’s mission is to increase homeownership, support community development and increase access to affordable housing free from discrimination. To visit the HUD website click here.

What is HUD-1?
The HUD-1 form is needed for every federally regulated mortgage transaction. The HUD-1 is a complete accounting of the real estate transaction. You may view a sample of this form and the instructions for completing it at http://www.hud.gov/offices/hsg/sfh/res/resappa.cfm.

What is RESPA?
RESPA stands for “Real Estate Settlement Procedures Act”. It is the law that requires that you be given certain information when you buy a home and regulates the actions of the people involved in closing the transaction.. HUD enforces the requirements of RESPA. To learn more about your rights under RESPA click here.

Closing Questions

Why is the APR on the TIL different from on the interest rate on the Note?
The Annual Percentage Rate (APR) shown on the Truth in Lending form is calculated by taking into account various loan charges of which interest is only one such charge. Including these charges over the life of the loan results in a rate generally higher than the interest rate as stated on the Note.

What is the finance charge (TIL)?
The finance charge is the amount of interest, prepaid finance charge and certain insurance premium (if any) which the borrower will be expected to pay over the life of the loan.

What is the amount financed?
The amount financed is the loan amount minus the prepaid finance charges.

What does reproration agreement do?
The reproration agreement is between the purchaser and seller usually regarding taxes. The parties will wait until the actual bills are out at which time they will determine (re-prorate) the shares for each party.

When can I stop paying private mortgage insurance?
Private mortgage insurance can be dropped once the homeowner has at least 20% equity in their home and have been current with their payments. Most times the lender will require an appraisal to be done to verify the equity value. Most PMI policy charges will be automatically terminated by the lender after the borrower reaches 78% loan to value based on an amortized schedule.

What does the aggregate adjustment do?
In a most abbreviated answer: lenders are only allowed to hold a combined 2 month “cushion” in their escrow accounts. If the initial escrow amount exceeds this cushion, they must refund the additional funds via a credit at closing.

What’s an endorsement?
An endorsement is issued with the title policy at the lender’s request. The endorsement protects the lender from specific risks associated with a loan. There are many endorsements that may be issued with a title policy based on the type of loan insured.

What’s an origination fee?
An origination fee is a percentage of the loan charged on some loans based on the type of loan program requested. The fee should be explained to you by your loan officer at the time of application.

What’s a discount point?
A discount point is 1% of the loan. Points may be charged to obtain a more favorable interest rate for the borrower with commercial, FHA and VA loans. Your loan officer will explain the reason for any points on the loan when you apply.

Why does the customer have to sign waiver of 5 days notice for homeowners? (FHA loans only)
FHA requires homebuyers/homeowners to attend seminars or read some brochures prior to closing their loans. The FHA requires a 5 day waiting period after these seminars are attended or brochures are given to the applicants. If they need to close sooner than those 5 days, then they must sign a waiver saying they understand the closing process and wish to proceed.

Why are the fees different from the good faith estimate?
The fees on the good faith estimate are just that: ESTIMATES. However, these fees should be close to what the actual fees are at closing. New loan fees that weren’t disclosed on the Good Faith Estimate cannot be added at a later time.

Why do I have to purchase Title Insurance on a refinance?
In the case of a refinance the title insurance is for your lender. The lender needs to make sure that there are no liens judgments which could interfere with the mortgage.

Why do I need Title insurance on a new home?
The home you are building is new, but the land it is built on is not. The land may have had many owners prior to you and the search assures you of a clear title.

Why is the payoff amount higher than the principal balance of the loan?
The principal balance is from your last payment. It is not uncommon that interest will be added to your principal balance to make the payoff higher than principal alone.

When will I get my escrows back?
Escrows are mailed back within 30 days after payment is processed. Compare the amount on your last statement to what you are getting. Your prior lender should be able to explain any differences.

Why do I have to have escrows?
The lender holds escrows to make sure real estate taxes and insurance bills are paid. If taxes are not paid the property could go to a tax sale and a purchaser in a tax sale takes precedence over the lender. The lender must protect its fist lien position by making sure the taxes are paid. The lender also protects itself from loss by making sure the property is insured.

Where do I send my payment?
The new lender will send a coupon book or statement to you before your 1st payment. If you do not receive anything call your lender. The mortgage is still due whether or not you receive notice from the lender.

Why do I have to wait 3 days after closing for my money?
Purchasing or refinancing a home is a large and complex transaction and financial commitment. The government requires that anyone who wishes to refinance be given a 3day “cooling off” period to review documents and make sure they agree with all the terms and conditions.

Title Questions

How do I clear exceptions from title?
Many title exceptions can be cleared relatively easily — it depends on the type of exception to be cleared. Please click here to contact our office and we will be happy to work with you.

Why are there exceptions on my title in the first place?
Please contact us so we can personally evaluate this with you.

I’m buying a house and there were exceptions found in the title search. Does this mean there is something wrong with the property and I should not buy it?
Exceptions or defects are discovered on about 25% of the properties searched. There are many reasons for exceptions, but the good news is that most can be cleared easily. When the title is cleared and a policy is issued you are protected from monetary damages due to title problems – even hidden defects.