Buying a home is one of the most important financial decisions a person can make. Once you’ve found your dream home and have made an offer, it’s important that you obtain title insurance to protect your investment. In many cases, mortgage lenders require title insurance before they provide buyers with a loan.
Without this insurance, an ownership dispute could arise that threatens your investment. While many prospective buyers believe that all title insurance companies provide similar benefits, the truth is that the exact company you purchase title insurance from can make a considerable difference in how protected you are. The following goes into more detail about why selecting the right title insurance provider is essential.
A title is a simple document that shows legal ownership of a home. This document will also consist of extensive details about past owners of the property as well as the boundary lines that make up the property. In order to avoid any ownership issues, it’s important that the document is considered to be a “clean” title.
If you happen to purchase a property without a clean title, you could become responsible for paying previous home improvement bills, homeowners’ association fees, and unpaid property taxes. There’s also a possibility that someone else could still have ownership of the home, which is why title insurance is necessary.
According to Nate Baker, Founder and CEO of Quaila, a real estate tech company “by some estimates, upwards of 30% of all land titles have defects — meaning ownership may not be clear or there are actions needed to be taken to make it so. Buyers should educate themselves as much as they can about the process before it starts.”
There are two forms of title insurance policies that can be used to protect against future losses. The first type involves title insurance that’s obtained by the lender to help pay for any court costs that might occur in the event that a claim is made against the title. This is almost always required and referred to as a Lenders Policy. As a buyer, you have the option to purchase an Owners Policy which will protect you from a future ownership dispute or possible defects on title that could result in costly court fees.
Every title company isn’t the same. If you want to be certain that your purchase of a home is protected, it’s important that you obtain insurance from a company that’s supported by the top underwriters in the country, provides reliable customer service, and has extensive local knowledge that facilitates a smooth transaction.
The majority of states across the country have rates that are regulated which means that every title insurance provider must charge a similar premium for title insurance. While there are several additional factors that dictate how much you should pay for title insurance, expect these costs to be between $500-$2,000. You’ll find that these expenses are folded into the closing costs. Although, most rates are regulated it’s still important to shop around for title insurance quotes. Often times, if you acquire a quote that is dramatically lower than another local title company, there’s a possibility certain fees and charges are being hidden. You don’t want any negative financial surprises on closing day, so ask your title rep or company to explain the fees and quote differences.
When you want to be certain that you’re selecting the right title insurance company, there are several considerations to take into account. First of all, it’s highly recommended that you obtain insurance from a company that provides stellar customer service. Ask for past client referrals, which will allow you to determine how effective a title insurance agent is at meeting the needs that their customers have.
Title insurance companies must also coordinate between several parties while the closing process is ongoing, which is why excellent communication skills are a must. Poor communication could cause delays during the closing process that only serve to keep you from moving into your new home for longer than you had anticipated.
Make sure that you choose a title insurance company with a strong reputation if you want to avoid future hassles. Look for online reviews and ask for recommendations from your friends or family members who have recently purchased a home. By doing your due diligence beforehand, you should be able to avoid a costly mistake.
If you want to be certain that your real estate transaction goes through without a hitch, give us a shout and one of our experienced rockstars will walk you through the entire process.