Getting title insurance is one of the standard steps homebuyers take before closing on a home purchase or refinancing a mortgage. In fact, if you are getting a mortgage, your lender will require you to purchase title insurance. Title insurance is crucial for a homebuyer because it protects you against claims that someone else owns the home you are buying or has an undiscovered lien against the property. The risk that the person selling you your new home does not have free and clear ownership of the property—and therefore cannot rightfully transfer full ownership to you—could be disastrous. A good title insurance company, with skilled underwriting talent, however, can discover these issues before closing and, in the rare case where an undiscovered issue appears post-closing, defend and protect you against claims.
Unlike most types of insurance which protect policyholders from future events, title insurance protects you against defects that could already exist. Even though the chance you will need to file a claim is low, the exposure—in terms of the value of your home—is high.
Yes. There are two basic types of policies: an Owner’s Policy and a Lender’s Policy. The Owner’s Policy protects the homeowner’s interest in his or her home. The Lender’s Policy protects the bank’s interest, but does not directly protect the homeowner. That is why homebuyers generally choose to purchase both a Lender’s Policy and Owner’s Policy. Your lender will require you to purchase at least a Lender’s Policy, but remember that this does not protect your equity in your home.
Probably a lot less that you think. Title insurance fees generally cost less than 1% of the cost of the property, sometimes a lot less. The premium is calculated based on the amount you are paying for your home and the amount you are borrowing if you are getting a mortgage. You pay the premium as part of your closing costs when you close on the purchase or refinance and the coverage lasts for as long as you own your property or have the mortgage. Please call us for a quote on your transaction.
By law, it is the homebuyer’s choice. While many homebuyers (or homeowners who are refinancing) allow their attorney, real estate agent or lender to select the title company, they should remember that it is always the homebuyer or homeowners’ choice.
Be sure to tell your attorney and lender that you want to select your title insurer.