Homebuyers typically need two title insurance policies – an owner’s policy and a lender’s policy, which protects the lender. Title insurance protects property buyers and mortgage lenders from defects or problems with a title when there is a transfer of property ownership. If a title dispute arises during a sale, the title insurance agency may be responsible for paying specified legal damages, depending on the policy.
The title company researches records to make sure there are no undisclosed heirs to the property, unpaid taxes, pending legal action, errors, fraud or other problems with the deed. The title must be clean, and it must be verified that the seller really owns the property and is free to sell it.
Here Are Six Questions You Should Ask Your Title Company:
- Are title insurance prices regulated in our area? In many states, they are, so there won’t be much of a price difference among companies. Still, smart consumers should look at two factors – the quality of the insurance and the quality of the title search. The goal is to find a title company that will conduct a thorough search and an underwriter that will still be around in 10 or 15 years if there’s a problem. Even if title insurance costs are regulated, ancillary expenses such as wire transfer fees or courier fees can add up, so ask about the complete transaction price, not just insurance costs.
- Who typically pays for title insurance? The party responsible for paying for the two policies – both the buyer’s and the lender’s – varies from state to state and sometimes from county to county. In some areas, the buyer may pay for one and the seller, the other. That doesn’t mean that if the buyer pays, he can’t haggle over all or part of the cost – it can always be negotiable. If you’re buying the owner’s and lender’s policies from the same company, in many cases, there may be a substantial discount.
- How much coverage do I need? Owner’s policies typically protect against a number of contingencies, such as fraud, forgery, undisclosed heirs and spousal claims. Additional coverage could elevate the cost. Or your lender might require additional insurance on the property or mortgage. This needs to be discussed with your title company.
- Is the seller pushing you to use a specific title company? If you pay for the title insurance, you have the right to select the company. If you’re not paying, but want to choose the company, be prepared to share some of the costs. Be wary if the seller is pushing his title company. A title search is meant to find errors before you buy and often searchers aren’t using actual records, but summaries or extracts of those records.
- Whom can I trust? If you’re getting advice from your seller, your real estate agent and your mortgage lender, look to the lender, because their interest coincides with yours in getting these things done properly. The lender is guaranteeing a large amount of money based on the assertion that the property you’re using as collateral is really yours.
- How much reassurance should I expect? Banks and insurance companies aren’t supposed to fail, but they sometimes do. If you want to verify that the underwriter issuing the insurance policy is sound, check its financial solvency with online ratings companies. You can also research the underwriter and title company or attorney online to see what past customers are saying about their services.
Go into the title home closing process prepared! If you want more information from an expert in title, call the A-1 Team today and let’s discuss your needs and options.
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