Title Insurance: How much does it really cost?

1. H o w m u c h i s title insurance?

2. What about the title search? We know what you’re thinking: “But isn’t that what lawyers are for? Why did I pay to have an attorney review the title and closing documents?” The short answer is that even expert lawyers can miss something among all the documents at closing or be blindsided by a preexisting claim.Title insurance companies will hire someone to do a title search on the property you want to buy. The title agent or attorney will come up with a sort of family tree for the property, trawling local government records to recreate the history of ownership on the home. They’ll do the digging to put together the “title chain” for the home, and determine whether any claims or liens exist against the title. This process takes place before your closing and is called a “title search.” But even title searches aren’t infallible.

3. What kinds of things are they looking for in the title search? Maybe there’s a long-lost heir or estranged spouse who could resurface and lay claim to the home. It may sound like something out of Dickens, but it happens. Or maybe a former owner owes money to a contractor who repaired the home. This contractor could put a lien on the property to recoup what is owed. Only now it’s your property.

4. What s a lien? ’ A lien is the right to take possession of another person’s property — or receive a portion of the money from the sale of the property — because of an unpaid debt. It doesn’t have to be your debt for there to be a lien on your property. For example, if the last owners of the home weren’t paying their property taxes, the IRS might put a lien on the home. So why is title insurance necessary? With title insurance, you and your lender won’t have to worry if these kinds of problems crop up. The title insurance company will identify and �x the problems before you close on your house and defend you if any issues arise after closing.

5. How does title insurance work? Unlike other forms of insurance that you pay for from month to month, title insurance is paid in one up-front lump sum. At the time of closing, you’ll pay for title insurance on top of other closing costs and fees.Title insurance comes in two forms: lender’s title insurance policies and owner’s title insurance policies. The owner’s policy protects you, while the lender’s policy protects your mortgage lender. Mortgage servicers require lender’s policies because they don’t want you to stop making your mortgage payments if a problem arises with the title on the home. This is true whether you’re buying a home or re�nancing it. Because re�nancing is essentially getting a new mortgage, you’ll still need to pay for lender’s title insurance when you re�nance.Owner’s policies are usually not required to secure a mortgage, but they can still be a good idea when you consider that a relatively small up-front payment could save you tens of thousands in legal fees — or save you from losing your equity if you lose a dispute over the title. It’s a lot of protection for a little bit of money.

6. Who pays title insurance? In some states, the homebuyer pays the cost of both lender’s title insurance and owner’s title insurance. In other states, the seller pays the title insurance fee. In the rest, title insurance costs are up for negotiation between the buyer and the seller. Title insurance rates vary from state to state, too. Sources: Image: https://artesiantitle.com/ Article: https://smartasset.com/mortgage/title-insurance