Things to Know about Title Insurance
The homebuying or refinancing process is complex and potentially stressful. There are many factors to consider throughout the transaction including school districts, access to shopping and restaurants, and location, location, location. Typically, title insurance is not on the forefront of a homebuyer's mind although in most cases it should be.
What is Owner's Title Insurance?
Arguably, the title to a home is the most valuable asset in the home buying process. Obtaining Owner's Title Insurance, also known as an Owner's policy, protects the homebuyer from problems with title that were not found in the public records or were missed in the title search process. Such problems include:
Owner's Title Insurance fully protects the buyer from these and other title problems, is usually given in the full amount of the real estate transaction, and lasts as long as you or your heirs retain interest in the property. Further, an Owner's policy is purchased for a one-time fee at closing which covers the cost for expert professionals to remedy problems with title. Unlike other forms of insurance, title insurance does not charge annual premiums to provide protection for future claims; your title experts will work to prevent future claims while minimizing the stress and complexity of the title insurance process. Licensed title agents provide curative work on title, adding another layer of protection to your Owner's policy.
You also have the option of extending your title insurance coverage with what is called the Homeowner's Policy. Ask your local title experts for more details on the Homeowner's Policy so you may back an educated decision on the best policy for you.
What is Lender's Title Insurance?
There is a second type of title insurance known as Lender's Title Insurance (also known as a Loan Policy). This policy does not protect the buyer and is typically based on the dollar amount of your loan. The policy amount decreases as the loan is paid off.
Prices and fees vary from state to state. Be sure to ask your title experts for such specifics.
What does title insurance protect against?
Title insurance is meant to protect an owner or lender's financial interest in real property against loss due to title defects, liens or other matters. It will defend against a lawsuit attacking the title, or reimburse the insured for the actual monetary loss incurred, up to the dollar amount of insurance provided by the policy. There are typically two types of policies, owner and lender.
Title insurance is your only protection against loss or damage from any claims of ownership that may still exist against the title to your property. A title search and examination done on the property may show problems such as liens, unpaid taxes, outstanding mortgages, or a judgment against the seller, boundary/survey disputes, undiscovered wills, etc.
How often do I pay title insurance premiums?
Title insurance premiums are only paid once, unlike other insurance premiums. It is usually paid at time of closing and will remain in effect as long as you retain interest in the property.
A new law goes into effect on July 1st, 2017 and requires estoppel certificates to be provided within 10 days of the initial request and be valid for a minimum of 30 days. For owners who are current on their dues, the estoppel fee cap is $250. For owners who are delinquent on their dues, an additional fee of $150 can be charged. For rush estoppels, the fee cap is $100 for rush deliveries within 3 days.
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