Title Insurance: Why You Need It and How to Pay Less for It
Article Source: OWNERS.COM
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What Is Title Insurance?
Who Is Protected? There are two forms of title coverage: a lender’s
Title insurance covers legal costs to defend your
policy and an owner’s policy. If you use a mortgage
title and any damages that result from an invalid
to buy your home, your lender will require you to
title. A claim against your title can jeopardize your
purchase a policy to protect its interest. If the
ownership of the property, so having insurance is
property title turns out to be invalid, the lender’s
not only recommended, it’s often required. Think
policy will reimburse the lender for the
about it: your property most likely changed hands
outstanding mortgage balance.
many times before you bought it. And any of those previous transactions could have defects, which
However, as the property owner, you will lose your
could invalidate your ownership and cause you to
investment and accrued equity. To protect your
lose your home and all that you put into it.
own interest, you need an owner’s policy, which covers the cost of defending your title or
Someone might have once sold the land without a
reimburses you for your losses. The standard
spouse’s permission, for example, or there could be
owner’s policy covers defects from events
forged signatures, contested inheritances from
occurring before the effective date of the policy,
years ago, unpaid real estate taxes or liens from
and an enhanced owner’s policy can cover a
contractors. Having the right insurance can help
greater range of defects and provide for automatic
protect your investment from these scenarios.
increases in coverage limits each year.
Who Pays for Title Coverage?
Why Do Costs Vary?
Title insurance is often very expensive. While a
The cost of insurance and escrow services ranges
buyer and seller can usually divide the closing
widely between states because every state has a
costs, the payment arrangement for title coverage
different set of regulations. Some states require
varies by location. The most common arrangement,
real estate closings to be conducted by attorneys,
however, is that the seller pays for the owner’s
for example. You’ll notice that most attorney-
policy and the buyer pays the more expensive
required states ask the buyer to pay for both the
lender’s policy. In some states, the policy premium
insurance and closing services. Owners.com offers
covers the title search and closing services, and in
a convenient way to buy title insurance when you
others, the services are charged separately and
purchase a home through their online platform.
costs may be split differently. Competition is also a factor because some states How Can I Save?
regulate title charges, while others allow consumers to shop for less expensive services. In
In addition to comparing the costs between several
states where charges aren’t regulated, consumers
providers, you can also bundle the lender’s and
can save money by comparing title and escrow
owner’s coverage in order to get a discount. You
costs at various providers and choosing a less
should inquire about other deals, such as those for
expensive provider. Check out your state’s policy
first-time buyers, senior citizens or buyers in
on title charges, and if you have the option,
certain professions. In addition, it’s common to
compare providers to save money.
receive a short-term rate for properties that have been resold within the last five years, or a subdivision bulk rate for homes purchased in a new subdivision. These discounts can range from five to over 30 percent, so it’s worth inquiring.