Andrew Ewalt's Law Blog

Eliminating Mortgage Insurance

Mortgage insurance (sometimes called Private Mortgage Insurance or PMI) is insurance that protects lenders against defaults.  Lenders typically require borrowers to pay mortgage insurance if they are borrowing more than 80% of the home’s purchase price.  These days many borrowers are unable to put 20% or more down when purchasing a home and are thus faced with having to pay PMI.  However, if you are tired of making mortgage payments that include PMI there are ways to eliminate it.

1.        Making payments towards the principle of the loan in order to increase the equity to 80% or more

2.        The power of home price appreciation raising the value of the home.

3.        Combination of 1 and 2. 

There can be many factors involved before a borrower can request that a lender cancel their PMI. Thus it is very important that the borrower consult the lender and their attorney before any steps are taken. 

Though it may seem to take forever before PMI can be canceled, when factoring home appreciation and the build up of equity in their home borrowers may be eligible sooner rather then later.

Referrals

I am often asked by clients to recommend other professional advisers (CPA, Financial Planning, Insurance, Real Estate, Banking and the list goes on and on) .  I treat these requests very seriously because as an attorney and trusted adviser my clients respect my opinion.  I want to be certain that they are matched with someone who will treat and respect my clients in the same manner I do.  I want to be certain that the adviser is someone I know can and will do the very best job.  So when I make a recommendation I do so with a lot of thought involved.  I try to understand my clients concerns, goals, needs, personality and location and then recommend someone who will best match these criteria.  Over the years I have made many professional relationships and feel confident that if asked I can recommend one if not several very qualified candidates. 

Protect Your Business From Lawsuits

You might think that your business is unlikely to be sued.  But it could happen.

There are more then 70,000 civil lawsuits filed each day in the Unites States and most of them target small busniesses and individuals.

One easy way to protect yourself is with an umbrella policy which provides coverage above your primary insurance damage.  Umbrella insurance starts where your underlying general liability insurance limits are exceeded.

Here are some additional tips:

1. Taking the proper legal steps to make your business unattractive to those who may wish to sue. 
2. Prenuptial Agreements before marriage especially if one spouse-to-be has substantially more money than the other.
3. Shifting assets out of your name by using family limited partnerships. 
4. Employers should consider using binding arbitration and alternative dispute resolution agreements with all staff and those they do business with.
5. Warning customers of potential dangerous situations can also make it harder to get sued.

What is a "Will" exactly?

A will is a list of written instructions drafted under legal formalities that express how an individual’s personal property will be disposed of when they die.  The term “Last will and Testament” is the legal term often used for a will.  This is an old term, which means, “I dispose of my personal property and estate assets.”

Clients often ask me if it is okay for them to write their own will. I tell the sure, as long as you know what your doing and follow all the legal formalities required under Connecticut state law, that is, if you want you will to work.

Wills are a unique creation of society.  The law surrounding wills is full of technicalities and very formal procedures.  I have seen very few of the home drawn wills actually work or accomplish what the maker intended.  As such do-it-yourselfers should leave the drafting of wills to an attorney who is knowledgeable in estate planning.

Nursing Home Alternatives

I had the opportunity to read a rather funny take on alternatives to the nursing home.  I will pass along one I thought was very ingenious.  Let me know what you think. 

"No  Nursing Home for Me"


About 2  years ago my wife and I were on a cruise
through  the western Mediterranean aboard a  Princess
liner.  At dinner we noticed an elderly lady sitting
alone  along the rail of the grand stairway in the main 
dining  room. I also noticed that all the staff, ships
officers,  waiters, busboys, etc., all seemed very
familiar  with this lady.

I asked  our waiter who the lady was, expecting to be
told  that she owned the line,but he said he only knew 
that she  had been on board for the last four cruises,
back to  back.

As we  left the dining room one evening I caught her
eye and  stopped to say hello. We chatted and I said,
"I  understand you've been on this ship for the last 
four  cruises". She replied, "Yes, that's true." I
stated,  "I don't understand" and she replied, without
a pause,  "It's cheaper than a nursing home".

So,  there will be no nursing home in my future. When I 
get old  and feeble, I am going to get on a Princess
Cruise  Ship. The average cost for a nursing home is
$200 per  day. I have checked on reservations at
Princess  and I can get a long term discount and senior
discount  price of $135 per day. That leaves $65 a day
for: 

1.  Gratuities which will only be $10 per day.
2. I  will have as many as 10 meals a day if I can
     waddle  to the restaurant, or I can have room service
     (which  means I can have breakfast in bed every day of
     the  week).
3.  Princess has as many as three swimming pools, a 
      workout  room, free washers and dryers, and shows every
      night. 
4. They  have free toothpaste and razors, and free soap
     and  shampoo.
5. They  will even treat you like a customer, not a
     patient.  An extra $5 worth of tips will have the
     entire  staff scrambling to help you.
6. I  will get to meet new people every 7 or 14 days. 
7. T.V.  broken? Light bulb need changing? Need to have
     the  mattress replaced? No Problem! They will fix
     everything  and apologize for your inconvenience.
8. Clean  sheets and towels every day, and you don't
     even  have to ask for them.
9. If  you fall in the nursing home and break a hip you 
     are on  Medicare; if you fall and break a hip on the
     Princess  ship they will upgrade you to a suite for the
     rest of  your life.

Now hold  on for the best! Do you want to see South
America,  the Panama Canal, Tahiti,  Australia, New

Zealand,  Asia, or name where you want to go? 
Princess  will have a ship ready to go. So don't look
for me  in a nursing home, just call shore to ship.

PS. And  don't forget, when you die, they just dump you
over the  side at no charge.

Providing Control

Control is a necessary element in all of our lives.  We all want to maintain control over ourselves, finances and other important aspect of our lives. In fact most of us want control over every aspect of our personal situation.   

However, it has been my experience that many people do not consider what will happen to them if they lose or have to give up control due to illness, incapacity or incompetence, something likely to happen to 2/3 of us at some point in our lives. 

Taking control of the situation by planning for these eventualities through personalized estate planning documents like wills, trust, durable powers of attorney, living wills and health care directives places you back in the drivers seat if and when you begin to lose the ability to control your affairs. 

Planning gives you the opportunity to dictate the "who, what, when, where and how" of your life.  It gives you the power over your life and affairs even if you are no longer in "legal" control.  Thus you can be confident that even though you have given up some or even all control, your life and affairs will be maintained and managed according to  your wishes and not the whim of the state or courts.

Living Wills

So what is a living will exactly? It is a legal document that directs your physician to discontinue life-sustaining procedures (cardiopulmonary, artificial respiration and artificial hydration and/or nutrition) if you are in a terminal condition or a permanently unconscious state.

Living wills are very important b/c family members or loved ones are most often put in the position of having to decide whether to terminate or continue life support when there is no hope for recovery.  Having a living will means you have made the decision for them.

Unfortunately, in Connecticut our current living will statute more heavily favors providing liability protection to health care provider (doctors or hospitals) rather than protection to the patient right to refuse medical treatment.  Given the recent Terry Schiavo case it is time for our legislature to reconsider the statute in favor of stronger patient's rights. 

However, though not as strong as the law could be it is never the less the best way of conveying your wishes on this most personal choice.  It is always important to take control of your life and equally important to take control of your dying.  Having a written living will provides just that....control. 

Mortgage Escrow: What Is It?

Many of my clients/borrowers are surprised and confused to discover at  closing that they will need to pay more than just interest and principal in their monthly payment to the mortgage company. The reason for this is often attributable to escrow accounts. 

Typically a mortgage company will use escrow accounts to accumulate money from the borrower on a monthly basis to ensure the timely payment of important real estate related expenses.  These are often property taxes, home owners insurance premiums, and other recurring expenses.

In addition to each months escrow payment  lenders can  keep an annual reserve cushion amount totaling up to two-months of each recurring expense.  Due to recent changes in the law (for new loans) borrowers are entitled to an immediate refund of escrow if the amount exceeds the two-month cushion and so long as the amount is less than $50.00.

Most of mortgagors use escrow services for collection of payments for customers, and customers get them through buy to let mortgages. But when they have to pay some money on monthly basis they get shocked to see the bill of free home mortgage. Most of banks do not provide full services for customers and customers even do not bother to calc mortgage. Whenever you proceed for loan, you should have to use amortization table to figure out what cost you annually and monthly basis. In selection of any mortgage loan, you need to consider mortgage rate.

Real Estate Closing Checklist Part II: The Closing

The actual real estate closing occurs when the Buyer and Sell come together to exchange documents and money and when the Buyer  officially becomes the new owner of the real estate.  Though this is a rather simplified summation of the closing, in truth there are a number of requirements for both the Buyer and Seller to meet in order for the transaction to be  complete. 

Buyer:  Your closing typically will take between 1 and 1.5 hours.  This all depends on whether you are taking a mortgage or are paying cash at the closing.  If you are taking a mortgage you will be required to sign a number of important bank documents in order to secure the loan. These documents include among many others the

-Promissory Note: This is the document outlining your promise to pay the lender the amount you are borrowing to purchase the real estate.  The amount of the loan, interest rate and term of the loan are outlined here.

-Mortgage Deed :  This document reflects the terms of the Note and the responsibility of the borrower.  The Mortgage Deed gives the lender the home you are purchasing as collateral for your promise to pay the Note. The Mortgage Deed is typically recorded on the local land records so that the mortgage becomes public record and so that the real estate can not be conveyed (sold) until the mortgage has been released (payed off).

-RESPA/HUD-1:  This form outlines very specifically all of the financial aspects of the transaction and accounts for every penny of the transaction. This document includes both the Buyer and Seller information.

-Title Search and Insurance:  A title search will be preformed by the Buyers Attorney and is important in identifying the specific legal details of the real estate and what if any encumbrances are recorded on the land records.  The encumbrances typically found are mortgages that must be released by the Seller before the closing.  Additionally, the Buyers lender will require a Title Insurance Policy be purchased by the Buyer in order to protect the lender if a future title issue where to arise.  Though not required it is also a very good idea that the Buyer purchase their own policy to protect their interest. The Title Insurance is available through your attorney.

Sellers:   The Sellers portion of the closing should not take nearly as long as the Buyers because there are not nearly as many documents for the Seller to sign, this usually last around half of an hour.  Traditionally, the Seller and their attorney will arrive at the Buyers attorneys office for the closing.  The Seller is responsible for:

-Deed:  This is the bill of sale for the real estate. Signed by the Seller it contains the legal  description of the property.  The most common form of deed used in Connecticut is the Warranty Deed.  This form of deed transfers the real estate to the Buyers free of and encumbrances.

- Conveyance Tax Return: Connecticut charges a conveyance tax (sales tax) on the sale of real estate.  This tax is paid by the Seller typically from the proceeds of the sale of the real estate.  A return which includes the tax ID numbers of both parties is filed by the Seller when the Deed is recorded in the land records.

-Payoffs and Encumbrances: The Seller is responsible for paying-off all loans or encumbrances attached to the property and recorded on the land records. These will be identified by the title search done for the Buyer.

Our firm represents many clients in both residential and commercial real estate transactions. This is a general outline of the important closing elements. Please feel free to call our office for more information on how we can assist you with your upcoming real estate purchase or sale.

Real Estate Closing Checklist

Often people can get very nervous when their real estate purchase is about to close.  In order to alleviate some of the butterflies it can be helpful to accomplish a few tasks prior to closing.

1.  Contact your realtor, attorney and lender to verify everything is in order.

2.  Review all loan documents and the purchase contract.  Discuss any issues with the attorney.

3.  Contact the utility companies (electric, telephone, cable, water/sewer, gas) to have the service changed to your account.

4.  Purchase homeowners (hazard) insurance.  If you are obtaining a loan the lender will typically require that one year of homeowners insurance be prepaid prior to the closing.

5.  Due a final walkthorugh of the property to make certain that everything the seller agreed to accomplish prior to closing has been completed and per the contract that nothing has changed or been removed.

6.  If you are required to bring additional funds to the closing, obtain a certified check from your bank for the exact amount required (your attorney will inform you of this amount within a day or so of the closing).  These funds will typically be deposited in your attorneys Clients Funds account along with your mortgage funds obtained from the lender.