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No matter which side of the home buying process you’re on, it’s important to understand all the real estate terms and documents you’ll come across.

While you may be familiar with mortgages and contracts, one document that tends to be greeted with uncertainty is the house deed.

What is a house deed? Does it prove that you own your house? This guide will explain what a house deed is, why you may need one, and the role it plays in the home buying and selling process.

What Is a House Deed and Why Do I Need One?

A house deed, sometimes referred to as a property deed, is a written and signed legal document used to transfer ownership of real property. Real property is land and any property attached directly to it, like a house.

In other words, a house deed is very important to the buying and selling process.

In fact, a home transaction can’t take place without a deed. It’s one of the things you need to buy a house. Both the buyer and seller of a property must sign the document for a transfer of ownership to take place. Every state requires that this be done in front of a notary and, in some states, before other signature witnesses as well.

Is a House Deed Different From a Title?

Though the two terms are often used interchangeably, a house deed and a title are very different.

It’s often assumed that a title refers to a document, but it’s actually more of a concept referring to your legal ownership of a home. A title grants you ownership rights, including possession, control, exclusion, enjoyment, and disposition.

Put simply, a title refers to your ownership of the property, your ability to use your property as you please, to choose who enters your property, to enjoy your property as you see fit, and to decide when and to whom you transfer ownership of your property to.

But because you can’t transfer a concept, a physical document is needed to symbolize and confirm a change in ownership. This is where a house deed comes into play. Closings can take time, but without a deed they can’t happen at all.

What Is On a House Deed?

Deed requirements vary by state. But generally speaking, a house deed should include:

•   Description of the attached property.
•   Details of the grantors (sellers).
•   Details of the grantees (buyers).

Once all parties are in agreement, a deed should also include the signatures of both grantors and grantees. The deed must then be delivered to the grantee by handing the document over and accepted.

Recommended: How to Get a Mortgage in 2023

Types of House Deeds

There are different types of house deeds to be aware of. They offer different benefits, and even a few risks, to buyers and sellers.

Here’s what you need to know about the most common types.

General Warranty Deed

A general warranty deed is designed to offer premium protection to the grantee (buyer). This type of deed involves the grantor (seller) making covenants, or a series of legally binding promises, to the grantee.

Such promises could include what’s called the covenant of seisin. This covenant guarantees that the grantor is allowed by law to transfer the property in question. Another is the covenant of quiet enjoyment, which guarantees that the new owner will not be disturbed on their property, even if the grantor had a defective title, such as a previous lien or judgment.

Quitclaim Deed

Unlike a general warranty deed, a quitclaim deed is designed to offer maximum protection to the seller.

Also known as a non-warranty deed, this type of deed does not include covenants for the buyer. Should the seller unknowingly have a defective title, the buyer will have no legal recourse should the deed be challenged.

Special Purpose Deeds

Though not as common as a general warranty or quitclaim deeds, there are several types of special purpose deeds you may come across, especially if a seller has someone acting on their behalf.

Similar to quitclaim deeds, there is often little protection for the buyer but in some situations, a special purpose deed is the only legal option. Special purpose deeds include:

•  Gift Deed. A gift deed is used to convey a real property title that is given for no consideration, or without money exchanging hands. In some states, there is a time limit to record a gift deed or it becomes void. And despite money not being exchanged, transfer, records, and/or gift taxes are sometimes still required.
•  Tax Deed. If a property has fallen to delinquent taxes, a tax deed will be issued for the property transfer.
•  Administrator’s Deed. If the seller passes away without a will, an administrator’s deed may be used by the appointed administrator of the estate.
•  Executor’s Deed. If a seller passes with a will, an executor’s deed may be used by the estate’s executor to transfer the property.
•  Sheriff’s Deed. When property is seized by public office, an execution sale often takes place. A sheriff’s deed is then provided to the winning bidder to complete the transfer.

Obtaining or Transferring a House Deed

As a buyer, you’re not responsible for tracking down a house deed (though it is a critical factor in your house-buying timeline). But if you’re selling or taking out a second mortgage on your home, you’ll have to locate the document before moving forward.

Luckily, you can track down a house deed with just a few simple steps.

1. Determine your jurisdiction. A search for a house deed should always start by confirming your county recorder’s website .
2. Search the database. Once you’ve found the correct database according to the location of your property, search for the record of your house deed. You may need your property index number, but the address of your home may be enough to track it down.
3. Conduct an accuracy check. Assuming you find a record of your house deed, take a few minutes to ensure that it’s accurate. If you do spot an error, call the recorder’s office to determine how the issue can be resolved.
4. Request a copy. If everything with your house deed is accurate, you can request a copy from the recorder. You may need to submit proof of your identity or pay a fee for both the copy and certification. But once you’ve met all the criteria of the office, you’ll have a physical copy of your house deed.

If you’re struggling to track down your house deed, you always have the option of hiring a third party to handle the process for you.

Once you have the deed, you can start the transfer process. Because this is necessary in every home-buying transaction, your real estate agent should be able to walk you through the following steps.

1. Prepare the deed. Even if you’re not using a real estate agent, it’s a good idea to hire a real estate attorney to prepare the deed. An honest mistake on your part could void the transfer or lead to serious legal issues down the road.
2. Review the deed. Both parties should review the deed for any inaccuracies. This includes full legal names, addresses, and the description of property. No one should sign until both parties verify all information.
3. Sign the deed. Both parties need to sign in front of a notary. Check with your state law to see if other witnesses are required .
4. Record the deed. A signed deed should be presented to the local county recorder’s office where it will be filed and stored in their database. Be prepared to pay any associated fees and taxes at this point.

Recommended: Guide to Buying, Selling, and Updating Your Home

Knowledge is Power

Though legal requirements can vary, and different house deeds provide unique protections for sellers and buyers, a house deed is generally one of the most important documents to know about in real estate.

If you feel confident in your understanding of the home-buying process and you’re ready to start your journey to home ownership, SoFi offers home mortgage loans with flexible terms, an online application, and mortgage loan officers who are available to guide you through the process. It takes just a few minutes to find out if you pre-qualify. Then you can choose the mortgage that’s right for you and your financial situation.

SoFi can help you realize your dream of owning a home.

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Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Other than possible lender-imposed waiting periods after a mortgage loan closes, you can generally refinance your home as many times as you like. But you’ll want to do the math first.

Homeowners choose to refinance for a number of reasons: to lower monthly payments, take advantage of lower interest rates, get better terms, pay the loan off more quickly, or eliminate private mortgage insurance.

Refinancing involves paying off the current mortgage with a second loan that has (hopefully) better terms. Borrowers don’t have to stay with the same lender—it’s possible to shop around for the best deals.

Mortgage rates seem to be constantly in flux, moving mostly in parallel with the federal interest rate. In 2021, the average rate of a 30-year fixed mortgage was 2.96%. In 2022, as the Federal Reserve raised interest rates to try to tame inflation, mortgage rates began to rise and jumped to more than 7%. By mid-June 2023, the average rate of a 30-year fixed mortgage was 6.69%.

So is now the right time for you to refinance? Here are some things to consider before taking the plunge.

The Basics of Mortgage Refinancing

Because a homeowner who chooses to refinance is essentially taking out a new loan, the cost of acquiring the new loan must be compared with potential savings. It could take years to recoup the cost of refinancing.

As with the initial mortgage loan, a refinance requires a number of steps, including credit checks, underwriting, and possibly an appraisal.

Typically, however, many homeowners start with an online search for the rates they qualify for. (A lower average mortgage rate doesn’t necessarily translate to an individual offer—creditworthiness, debt-to-income ratio, income, and other factors similar to what’s required for an initial mortgage will matter.)

The secret sauce that makes up a mortgage refinance rate might seem like a mystery, but there are some common factors that can affect your offer:

•  Credit score: As a general rule, higher credit scores translate to lower interest rates. A number of financial institutions and credit card companies will give account holders access to their credit scores for free, and a number of independent sites offer a free peek, too.
•  Loan term/type: Is the loan a 30-year fixed? A 15-year? Variable rate? The selected loan repayment terms are likely to affect the interest rate.
•  Down payment: A refinance doesn’t typically require cash upfront, as a first-time mortgage usually does, but any cash that can be put toward the value of a loan can help reduce payments.
•  Home value vs. loan amount: If a home loan is extra large (or extra small), interest rates could be higher. But generally speaking, the less the mortgage amount is compared with the value of the home, the lower the interest rates may be.
•  Points: Some refinance offers come with the option to take “points” in exchange for a lower interest rate. In simplest terms, points are discounts in the form of a fee that’s paid upfront in exchange for a lower interest rate.
•  Location, location, location: Where the property is physically located matters not only in its value but in the interest rate you might receive.

What Types of Refinance Loans Are Out There?

As with first-time home loans, consumers have a number of refinance mortgage options available to them. The two most common types involve either changing the terms of the original loan or taking out cash based on the home’s equity.

A rate-and-term refinance changes the interest rate, repayment term, or sometimes both at once. Homeowners might seek out this type of refinance loan when there’s a drop in interest rates, and it could save them money for both the short term and the life of the loan.

A cash-out refinance can also change the terms or interest rate, but it includes cash back to the homeowner based on the home’s equity.

Within those two basic types of refinance options, conventional mortgages from traditional lenders are the most common. But refinancing can also happen through a number of government programs.

Some, like USDA-backed loans , require the initial mortgage to be a part of the program as well, but others, such as the VA, have a VA-to-VA refinance loan called an interest rate reduction refinance loan and a non-VA loan to a VA-backed refinance , so it’s important to shop around to find the best option.

How Early Can I Refinance My Home?

If a home purchase comes with immediate equity—it was purchased as a foreclosure or short sale, for example—the temptation to cash out immediately with a refinance may be strong. The same could be true if interest rates fall dramatically soon after the ink is dry on a mortgage. Especially for conventional loans, it may be possible to refinance right away. Others may require a waiting period.

For example, there can be a six-month waiting period for a cash-out refinance. Or, refinancing via government programs like the FHA streamline refinance or VA’s interest rate reduction refinance loan can require waiting periods of 210 days.

Lenders can require a waiting period (also called a “seasoning period”) until they refinance their own loans for a number of reasons, including assurance insurance that the original loan is in good standing.

For a cash-out refinance, some lenders may also require that the home has at least 20% equity.

Questions to Ask Before You Refinance

Just because you can refinance doesn’t necessarily mean you should. First, ask yourself these questions.

What Is the Goal?

Identifying the endgame of a mortgage refinance can help determine whether now is the right time. If a lower monthly payment is the goal, it can be wise to play around with a refinance calculator to see just how much a lower interest rate will help.

For years, it has been a general rule that a refinance should lower the interest rate by at least 2 percentage points to be worth it. Some lenders believe 1 percentage point is still beneficial (each percentage point amounts to roughly $100 a month in payment reduction), but anything less than that and the savings could be eaten up by closing costs.

What Is the Total Repayment Amount?

It’s important to remember that a lower monthly payment—even if it’s significantly less—doesn’t necessarily equal savings in the long run.

If a mortgage with 20 years remaining is refinanced to lower the monthly payment, for example, the most affordable option could be a 30-year mortgage. But is the lower monthly payment worth it if you’ll be paying it off for 10 additional years?

Will I Need Cash to Close?

One of the biggest differences between a first-time mortgage and a refinance is the amount it costs to close the loan. Many times, closing costs for a refinance can be rolled into the loan, requiring no cash at the outset.

Closing costs typically come in at 2% to 5% of the loan amount, and although they can be rolled into the loan and paid off over time, that could mean the new monthly payment isn’t as low as planned.

One way to make sure the investment is worth the cost is to consider how long it would take you to reach the break-even point, which is when you recoup the costs of refinancing. For instance, if it takes you 24 months to reach the break-even point, and you plan on living in your home for at least that long, refinancing may make sense for you.

Considering refinancing your home? SoFi offers mortgage refinance loans with competitive interest rates.

Whenever you’re ready to refinance, SoFi is here to help.

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Maybe you’ve considered refinancing your mortgage, but haven’t quite decided. Is now the right time? Will rates go lower?

It can be hard to know when to take the plunge.

Whether you purchased a home recently or bought a home years ago, you probably know the average mortgage rates now are high compared to the near-historic lows in early 2021.

But as with any financial rate or data point, it is hard—if not impossible—to time the market or predict the future.

Homeowners often look to refinance when it could benefit them in some way, like with a lower monthly payment. Refinancing is the process of paying off a mortgage with new financing, ideally at a lower rate or with some other, more favorable, set of terms.

Here are seven signs that locking in a lower mortgage rate could be the right move.

7 Signs It May Be Smart to Refinance Your Mortgage

1. You Can Break Even Fairly Quickly

Refinancing a mortgage costs money—generally 2% to 5% of the principal amount. So if you are refinancing to save money, you’ll likely want to run numbers to be sure the math checks out.

To calculate the break-even point on a mortgage refinance—when savings exceed costs—do this:

1. Determine your monthly savings by subtracting your projected new monthly mortgage payment from your current monthly payment.
2. Find your tax rate (e.g., 22%) and subtract it from 1 for your after-tax rate.
3. Multiply monthly savings by the after-tax rate. This is your after-tax savings.
4. Take the total fees and closing costs of the new mortgage loan and divide that number by your monthly after-tax savings. This yields the number of months it will take to recover the costs of refinancing—or the break-even point.

For example, if you’re refinancing a $300,000, 30-year mortgage that has a fixed 6% rate to a 4% rate, refinancing will reduce your original monthly payment from $1,799 to $1,432 — a monthly savings of $367. Assuming a tax rate of 22%, the after-tax rate would be 0.78, which results in an after-tax savings of $286.26. If you have $12,000 in refinancing costs, it will take nearly 42 months to recoup the costs of refinancing ($12,000 / $286.26 = 41.9).

The length of time you intend to own the home can affect whether refinancing is worth the expense. You’ll want to run the calculations to make sure that you can break even on a timeline that works for you.

The rate and fees usually work in tandem. The lower the rate, the higher the cost. (“Buying down the rate” means paying an extra fee in the form of discount points. One point costs 1% of the mortgage amount.)

If you’re shopping, each mortgage lender you apply with is required to give you a loan estimate within three days of your application so you can compare terms and annual percentage rates. The APR, which includes the interest rate, points, and lender fees, reflects the true cost of borrowing.

2. You Can Reduce the Rate by at Least 0.5%

You may have heard conflicting ideas about when you should consider refinancing. The reason is that there is no one-size-fits-all answer; individual loan scenarios and goals differ.

One commonly espoused rule of thumb is that the home refinance rate should be a minimum of two percentage points lower than an existing mortgage’s rate. What may work for each individual depends on things like loan amount, interest rate, fees, and more.

However, the combination of larger mortgages and lenders offering lower closing cost options has changed that. For a large mortgage, even a change of 0.5% could result in significant savings, especially if the homeowner can avoid or minimize lender fees.

If rates drop low enough, you might even choose to take a higher rate with a no closing cost refi.

3. You Can Afford to Refinance to a 15-Year Mortgage

When you refinance a loan, you are getting an entirely new loan with new terms. Depending on your eligibility, it is possible to adjust aspects of your loan beyond the interest rate, such as the loan’s term or the type of loan (fixed vs. adjustable).

If you’re looking to save major money over the duration of your mortgage loan, you may want to consider a shorter term, such as 15 years. Shortening the term of your mortgage from 30 years to 15 years will likely cost you more monthly, but it could save thousands in interest over the life of the loan.

For example, a 30-year $1 million loan at a 7.5% interest rate would carry a monthly payment of approximately $6,992 and a total cost of around $1,517,172 over the life of the loan.

Refinancing to a 15-year mortgage with a 5.5% rate would result in a higher monthly payment, about $8,171, but the shorter maturity would result in total loan interest of around $470,750—an interest savings over the life of the loan of about $1,046,422 vs. the 30-year term.

One more perk: Lenders often charge a lower interest rate for a 15-year mortgage than for a 30-year home loan.

4. You’re Interested in Securing a Fixed Rate

Borrowers may take out an adjustable-rate mortgage because they may get a lower rate (at least initially) than on a fixed-rate mortgage for the same property. But just as the name states, the rate will adjust with market fluctuations.

Typically, ARMs for second mortgages such as home equity lines of credit are “pegged” to the prime rate, which generally moves in lockstep with the federal funds rate. First mortgage ARM rates are tied more closely to mortgage-backed securities or the 10-year Treasury note.

Even though ARM loans come with yearly and lifetime interest rate caps, if you believe that interest rates will move higher in the future and you plan to keep your loan for a while, you may want to consider a more stable fixed rate.

Refinancing to a fixed mortgage can protect your loan against rate increases in the future and provide the security of knowing how much you’ll be paying on your mortgage each month—no matter what the markets do.

5. You’re Considering an ARM

You may also be considering a move in the other direction—switching from a fixed-rate mortgage to an adjustable-rate mortgage. This could potentially make sense for someone with a 30-year fixed loan but who plans to leave their home much sooner.

For example, you could get a 7/1 ARM with a potential lower interest rate for the first seven years, and then the rate may change once a year, when up for review, as the market changes. If you plan to move on before higher rate changes, you could potentially save money.

It’s best to know exactly when the rate and payment will adjust, and how high. And it’s important to understand the loan’s margin, index, yearly and lifetime rate caps, and payments. For further details, try using an online mortgage calculator

6. You’re Considering a Strategic Cash-Out Refi

In addition to updating the rate and terms of a mortgage loan, it may be possible to do a cash-out refinance, when you take out a new loan at a higher loan amount by tapping into available equity.

The lender will provide you with cash and in exchange will increase your loan amount, which will likely result in a higher monthly payment.

If you go this route, realize that you’re taking on more debt and using the equity you have built up in your home. Market value changes may result in a loss of home value and equity. Also, a mortgage loan is secured by your home, which means that the lender can seize the property if you are unable to make mortgage payments.

A cash-out refi may make sense if you use it as a tool to pay less interest on your overall debt load. Using the cash from the refinance to pay off debts carrying higher rates, like credit cards, could be a good move.

Recommended: How Does Cash Out Refinancing Work?

Depending on loan terms and other factors, a lower rate may allow for overall faster repayment of your other debts.

7. Your Financial Situation Has Improved

When putting together an offer for a mortgage, a lender will often take multiple aspects into consideration. One of those is prevailing interest rates. Another is your financial situation, like your credit history, credit score, income, and debt-to-income ratio.

The better your personal financial situation in the eyes of the lender, the more creditworthy you are—and the better the terms of your loan offer could be.

Therefore, it may be possible to refinance your mortgage loan into better terms if your financial situation has improved since you took out the original loan, especially when paired with relatively low market rates.

Recommended: Guide to Buying, Selling, and Updating Your Home

The Takeaway

Is it time to refinance? It might be if you could get a lower interest rate or better loan term. For instance, locking in a lower rate now may help you achieve your long-term goals by freeing up cash for other stuff, like retirement or a big vacation.

If you decide that refinancing makes sense for you, it’s wise to look for a lender that has competitive rates and flexible terms, like SoFi. Along with a streamlined process, SoFi offers a regular mortgage refinance and a cash-out refinance.

With SoFi, you can choose the right mortgage option for your needs.

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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You’ve decided to buy a home. Luckily, you’ve found a real estate agent who can help you find homes to look at and assist with negotiations and inspections. But what if that agent also works for the seller? But what if that person also works for the seller? That is called dual agency, and there’s a lot to consider before agreeing to the arrangement.

Here’s what future homebuyers need to know about dual agency to help decide if it’s the right choice for them.

What Is Dual Agency?

A dual agent represents both the buyer and seller in the same real estate deal. Dual agents are also sometimes referred to as transaction brokers.

Dual agency can be controversial and is banned in eight states: Alaska, Colorado, Florida, Kansas, Maryland, Oklahoma, Texas, Vermont, and Wyoming.

Other states do not explicitly make it illegal, but some do warn against using a dual agent.

For example, the New York Department of State issued a memo advising consumers to be extremely cautious when signing on with a dual agent because in doing so they forfeited their right to an agent’s loyalty.

However, in every state where dual agency is legal, the law requires agents to disclose their work with both the buyer and the seller. Both buyer and seller must agree to use a dual agent and sign a consent form indicating they understand what they are agreeing to.

Dual agency may also refer to deal-making of seller’s agents and buyer’s agents at the same real estate company.

For example, Keller Williams, one of the largest real estate firms in the nation, has both seller’s and buyer’s agents. If one of its seller’s agents puts a home on the market, there’s a decent chance that one of its buyer’s agents may have a client for the property.

This is less controversial and poses fewer issues as it is still two separate people overseeing the seller’s and the buyer’s interests.

Recommended: How to Buy a House Without a Realtor

What Are Agents’ Fiduciary Responsibilities?

Real estate agents are legally bound to represent the best interests of their clients. This means agents are to disclose any information they have that may or may not help their clients in the negotiating phase.

The obligation to disclose could pertain to information on home inspection reports, defects with the house, or anything else that affects the property’s value.

While representing a buyer, an agent must also disclose any existing relationship with the seller.

Be sure to ask real estate agents important questions about how they work and what they’ll do for you so you’ll know whether they’re the right agent for your needs.

A seller’s agent must disclose any relationship with potential buyers and all offers made on the property—unless, in general, the seller has instructed his agent in writing to withhold certain kinds of offers.

Real estate agents are also expected to put their clients’ financial best interests above their own. This could mean putting in an offer below asking price, which would reduce their own commission.

With all of that in mind, it becomes clear that issues of loyalty and confidentiality become challenging in a dual agency situation.

Pros of Dual Agency

Smoother communication: Having one agent representing both the buyer and seller could help create a smoother communication path. Because the person represents both parties, they may be able to speed up any negotiations. In this case, the dual agent may also better understand both the seller’s and the buyer’s timelines, their schedules, and any internal deadlines better than two separate parties could. Buyers wouldn’t have to wait for the seller’s agent to call back and sellers wouldn’t have to wait for a buyer’s agent to call back, because with dual agency they are the same person.

Potentially more information on the home: A dual agent may be able to obtain more information on the home than an agent just representing the potential buyer. In turn, they can relay any pertinent information, such as structural issues, inspection reports, and any updates made to the home, to the potential buyer.

Potentially more access to a larger pool of homes: Remember, dual agency also means a buyer’s agent and seller’s agent working for the same agency. That means, if one home doesn’t work out, the two agents could look internally to find more potential homes their agency represents for the would-be buyers. They may even be able to find a few homes that haven’t hit the market yet.

Possibility for a discount on commission: In a typical real estate transaction, the seller’s agent and buyer’s agent split the commission. A dual agent may be willing to negotiate down their commission since they are double-ending the deal.

Dual agents still have to do their job: In the end, even dual agents must present all offers, prepare all paperwork, present all disclosure agreements, and help to complete the deal.

Recommended: 6 First-Time Homebuyer Mistakes to Avoid

Cons of Dual Agency

Buyers (and sellers) won’t get special treatment: Agents only working for one side will likely be willing to go all out for their client to ensure that the client gets the best deal. An agent working for both sides may be more tempted to get the best deal for themselves to maximize the commission (hey, it’s just human nature to look out for No. 1). A buyer (and a seller) usually wants loyalty above all else when looking for a home. Homebuyers may want to seek out someone who knows what’s needed to buy a house and has their back.

Buyers (and sellers) may not get the price they want: Again, a dual agent’s allegiances are split down the middle during the deal-making process. A seller’s agent is meant to promote the home and get the seller the best price for the home with the fewest contingencies.

A buyer’s agent is on a mission to find every tiny thing that needs to be fixed with the home to get the buyer the best deal they can. If a person is representing both sides, how can they do both? It’s important to discern an agent’s allegiances before signing on the dotted line.

No pushback from the other agent: In a two-sided real estate deal, the two agents will typically go back and forth on the home’s price, any reductions the buyer may want in exchange for repairs, the home’s inspection report, and much more. This creates a system of checks and balances for both sides, which can be important when negotiating a fair deal. However, if one person is playing both sides, things may get muddled, hurting both the seller and the buyer.

The Takeaway

Dual agency is rare in the real estate world because most buyers and sellers want to find an agent who is loyal to them and has their best interests at heart. Still, if you find yourself in a dual agent situation, there is much to know.

There’s another important decision most homebuyers must make: getting the right home loan. Different lenders may offer different terms, rates, or perks that may fit a buyer best.

SoFi offers mortgage loans with competitive rates, an online application, and mortgage loan officers who can answer your questions.

Simplify the home loan process with SoFi.

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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When you’re buying a home, you probably have a million questions that need answering, especially when it comes to getting the proper insurance to protect your investment.

Soon-to-be homeowners may see both title and homeowners insurance on the lending documentation and wonder what the difference is between the two. While both types of insurance can provide vital coverage for homeowners, they differ vastly in their purpose and protection.

What Is Homeowners Insurance?

A homeowners insurance policy protects a home and personal property from loss or damage. It may also provide insurance in the event someone is injured while they are on the property.

Here are some common things homeowners insurance may cover:

•   Damage that may occur in the home, garage, or other buildings on the property
•   Damaged, lost, or stolen personal property, such as furniture
•   Temporary housing expenses if the homeowner must live elsewhere during home repairs

Depending on the policy, homeowners insurance may also cover:

•   Physical injury or property damage to others caused by the homeowner’s negligence
•   An accident that happens at home, or away from home, for which the homeowner is responsible
•   Injuries that take place in or around the home and involve any person who is not a family member of the homeowner
•   Damage or loss of personal property in storage

Some coverage may also apply to lost or stolen money, jewelry, gold, or stamp and coin collections.

Buying Homeowners Insurance

While someone can legally own a home without taking out homeowners insurance, the mortgage loan holder may require the homeowner to purchase an insurance policy. Typically, lenders do require this as a condition of the home loan.

It’s important to understand that homeowners need to insure the home but not the land underneath it. Some natural disasters — tornadoes and lightning, for example — are covered by typical homeowners policies. Floods and earthquakes, however, are not. If you live in an area where floods or earthquakes are common, you may want to consider purchasing extra insurance to cover damages from potential disasters.

Special coverage may also be worthwhile for those who own valuable art, jewelry, computers, or antiques.
There are two policy options that can help homeowners replace insured property in the event of damage or a loss. Replacement cost coverage covers the cost to rebuild the home and replace any of its contents, while actual cash value simply pays the current value of the property at the time of experienced loss.

When it comes time to shop for and buy homeowners insurance, start by asking trusted friends, family, or financial advisors for their recommendations. Do some online research, too. Before you make a final decision, contact multiple companies and request quotes in writing to compare their offerings. That process can give you a good idea of who is offering the best coverage for the most affordable price.

Recommended: Is Homeowners Insurance Required to Buy a Home?

What Is Title Insurance?

Title insurance provides protection against losses and hidden costs that may occur if the title to a property has defects such as encumbrances, liens, or any defects unknown when the title policy was first issued.

The insurer is responsible for reimbursing either the homeowner or the lender for any losses the policy covers, as well as any related legal expenses.

Title insurance can protect both the homeowner and lender if the title of the property is challenged. If there is an alleged title defect, which the homeowner may be unaware of at the time of purchase, title insurance can provide protection to cover any losses resulting from a covered claim.

The policy will cover legal fees incurred if there is a claim against the property.

Recommended: How to Read a Preliminary Title Report

Buying Title Insurance

Both home buyers and lenders can purchase title insurance. If the home buyer is the purchaser, they may want to insure the full value of the property. (The value of the property will affect how much the policy costs). When the lender is the purchaser, they typically only cover the amount of the homeowner’s loan. When it comes time for a home buyer to purchase title insurance, they have full choice of the insurer.

According to the Real Estate Settlement Procedures Act (RESPA) of 1974, the seller cannot require the home buyer to purchase title insurance from one certain company.

Lenders are required to provide a list of local companies that provide closing services, of which title insurance is just one. But it may be worth doing independent research. Lenders may not select their recommendations based on the home buyer’s best interest, but instead because a service provider is an affiliate of the lender and provides a financial incentive in exchange for a recommendation.

Again, it’s a smart idea to seek the counsel of friends and family and do online research to uncover competitive prices and learn which service providers have a solid reputation.

Recommended: What Are the Different Types of Mortgage Lenders?

The Takeaway

Homeowners insurance is an ongoing cost (billed monthly, quarterly, or annually) that helps cover damage or loss of the home and possessions within the home. Title insurance, on the other hand, can help protect against losses caused by defects in the title and is a one-time fee payable during the closing process. The advantage to having both types of coverage is that each policy can protect homeowners against financial loss in very different circumstances.

Shopping for homeowners insurance often requires considering several options, from the amount of coverage to the kind of policy to the cost of the premium. To help simplify the process, SoFi has partnered with Experian to bring customizable and affordable homeowners insurance to our members.

Experian allows you to match your current coverage to new policy offers with little to no data entry. And you can easily bundle your home and auto insurance to save money. All with no fees and no paperwork.

Check out homeowners insurance options offered through SoFi Protect.  

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Insurance not available in all states.
Experian is a registered service mark of Experian Personal Insurance Agency, Inc.
Social Finance, Inc. ("SoFi") is compensated by Experian for each customer who purchases a policy through Experian from the site.

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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