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Jim Jaworski

Central WI Real Estate
Wausau, WI 54401
Real Estate Broker
715-571-1156
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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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Jim Jaworski
Central WI Real Estate

2610 Stewart Ave Suite 120
Wausau, WI 54401
Phone: 715-571-1156
Email: jim@centralwisconsinRE.com

Testimonials Page


Angela Wenman Biese  recommends Central WI Real Estate.
August 31 · 

Jim is a wonderful realtor for your commercial or residential real estate sale or purchase - he was both a buying agent and a selling agent for us on several occasions and we could not have made a better choice. His knowledge of the local market and experience are second to none!

Kenneth Krouse reviewed Central WI Real Estate — 5 star
June 25 · 

Jim is a very straight-forward, knowledgeable, and successful realtor who I would not hesitate a second to call on again if needed. Thanks to Jim, we priced our house $15,000 higher than another realtor suggested we list it at, and we got our asking price. Jim helped us through the entire process and helped to make it a lot less stressful experience. I also know Jim to be a very dedicated and involved family man and solid individual.

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