Closing on a home? Then title insurance is imperative. Buyers need this owner's policy when buying a home. Closing costs usually encompass the fee of obtaining this important insurance, which is worth every penny. When purchasing a home there are some fees that may be worth arguing over but title insurance is not one of them. Keep reading to find out why.
What exactly is title insurance? Unless you're an attorney or real estate professional, you may not know what this type of insurance is. Also called an owner's policy, title insurance is protection from issues, which may arise in connection with the title of your property. Common title issues involve lost heirs, property liens, past mortgages, unpaid taxes and judgments. Owners need a clear, legal title to their property but may not understand that sometimes buying a home can become entangled with sticky title problems. Title insurance gives reassurance that if for some reason, the title company failed to find any problems with the title, that firm will fight to protect your asset. News like that can be music to a new homebuyer's ears.
Who needs title insurance? Basically everyone who is buying a home would do well to purchase an owner's policy. Homebuyers seeking a mortgage are required to buy title insurance to protect the lender's investment. Typically, this insurance covers the amount of the mortgage. Luckily, title insurance is a one-time fee and usually appears only in closing costs. The nice thing is that this type of insurance lasts indefinitely as long as you own the property. It is a small price to pay for peace of mind.
When buying a home, a title insurance agent may be selected for you so charges can be combined with closing costs. However, it may behoove homebuyers to check rates and different policies, as it is possible to save money sometimes. Also, buyers combining down payments with mortgages may want to look into getting extended policies. Usually an owner's policy only covers the amount of the mortgage. Extended coverage can be purchased to include equity through most title insurance companies.
New homebuyers have unexpected bills when buying a home but skimping on title insurance is not a good way to save. Shopping around and speaking to title insurance agents can save money and put minds at ease. Getting a Good Faith Estimate for closing costs lets homebuyers know about how much they'll pay for title insurance.