When you are in the market to purchase a home, you may put in a lot of offers on homes until you find the one that is right for you. When a seller does accept the offer, the closing process will require verification by the title company that the seller is the sole owner of the property and there are no other claims on the title before you move in. This is a process that is known as making sure the buyer has a “clean title”.
The title company is the one that will do the work that is necessary to make sure that the title is clean. They have the resources and know-how to complete the research to look over the title and get all the liens and other issues handled before the closing on the home. If there are any problems that show up with the title during or after the closing process, the buyer will be able to use the title insurance to be protected.
This can lead to several questions about what title insurance covers, how much it costs, and whether it is actually required or not. Understanding all of this will help you understand why this insurance is so important.
What is Title Insurance for the Home Buyer?
A title insurance policy is going to cover you through the entirety of the mortgage term. This policy will insure against past events and some of the actions of the previous owners. A title company will be able to research all of the public records to find potential issues with the ownership and can work with the seller to correct the issues.
There are different examples of issues that may be present. For example, the previous mortgage may have a lien on the property to make sure they get paid. The title company will ensure the mortgage gets paid so that they will release the lien and give the title to the new owner. If the previous owner has delinquent taxes, these can get paid off before the sale is complete.
Based on the information from the title search, the mortgage loan underwriter will be able to determine whether they want to insure the title. If it is insurable, then the title company gets to issue a title insurance policy to the lender and to the buyer for protection.
What Does Title Insurance Cost?
The cost of this insurance is going to depend on the location of the home and the purchase price as well. It is often a one-time fee that is paid when the buyer closes on the home and is often between $500 to $3500. You can shop around to see how much the insurance is going to cost and make sure that you go with the right title insurance company.
What is Covered Under Title Insurance?
There are a number of things that are covered under a title insurance policy. It is meant to help cover some of the common issues that a buyer may have, such as overdue property taxes, late utility payments, and more. You can also get an enhanced policy, which will cost more but helps to cover additional items. Some of the things that title insurance will cover include:
- Any undisclosed heirs
- Paperwork that was submitted under a false power of attorney.
- Any prescriptive rights which is giving someone other than the property owner the rights to use the land and this information was not on the record or disclosed by a survey
- A false representation of a true landowner
- Expired or improper notarization of acknowledgments
- Legal documents that were not improperly recorded.
- Forged paperwork
- Failure to include all parties in certain judicial proceedings
- Issues with a conveyance by an undisclosed divorced spouse
- Inadequate legal descriptions
- Issues with an heir or survivor of a joint estate who tries to attain a title by ill-gotten means.
These are just a few of the things that are covered by the title insurance, which can help provide you with some peace of mind in case something does go wrong. If you are worried about whether something is covered or not, then you should consider whether you would like to use that title insurance or not.
How to Save on Title Insurance
There are a few steps that you can take to help save money on your title insurance. Some of these include:
- Shop around: You can shop around and see whether there is an option for a less expensive title insurance policy. Sometimes the buyer will just go with the one that their real estate agent offers, but if there is more than one option available in your area, then it is a good idea to look around and see whether one company is better than another.
- Bundle policies: Some title companies offer you a discount if you bundle the lender’s and owner’s policies. This can help to save you some money along the way.
- Negotiate add-ons: It is possible you live in a state where the fees of title insurance will be fixed. If this is true, then you can ask the title company for some discounts on the other fees to help save money.
- Negotiate with the seller: The person who needs to pay for different closing costs will depend on the agreement between the buyer and the seller. You can negotiate with the seller to ask them to pay for the title insurance, saving you some of the money and having them take on some of the costs for you while still getting some of the protection.
Title insurance is one of the best decisions that you can make when you are purchasing a home. It can be an additional expense that you need to take on when closing on the home, but it ensures that your home is going to be clear and you don’t have to worry about someone else laying claim to the home. When you are looking for the right title insurance for your home purchase, look no further than Sunnyside Title Insurance to help get it done. Trust us to make the process of closing on your home a little bit easier!