Why Title Insurance for Home Buyers is Important
Title Insurance companies have been in existence since 1853. Title insurance is indemnity protection against financial loss from defective titles to home properties. There are certain situations to look for prior to purchasing a home. In many cases, land properties may have been subject to several ownership changes. For instance, someone may have forged a signature when transferring titles or the real estate taxes and liens may be unpaid. This is why homeowners may need title insurance to protect their investment from loopholes in the U.S. land record laws.
It is necessary to purchase title insurance if there is a mortgage loan on the property. All mortgage lenders request potential homeowners buy title insurance to cover the amount equal to the loan. This protection is set until the mortgage loan is repaid. However, title insurance does not protect equity in properties. Keep in mind that there are other insurance policies that cover this. Coverage for title insurance ends the day the policy on the home is issued.
The Role Title Insurance Companies Play
Title insurance companies play an integral part in home purchasing transactions. Before any transaction is closed, title officers comb through public records to survey the status of the title for the property in question. After a title officer has thoroughly searched through records, they will discuss the findings with the home buyer.
Here is a list of issues you can expect title insurance companies to look for:
• Unpaid back taxes or mortgages
• Court judgment and procedures from the past
• Counterfeit deeds, mortgages, and other title insurance factors
• Fictitious showings of who the true owner of the land or property is
• False information stemming from fake or expired powers of attorneys
• Records indicating someone owns the property through contested wills or divorce procedures
• Misleading deed transfers by former owners
• Inaccurate interpretations of wills, deeds, and other title insurance issues
The Cost of Title Insurance
Title insurance fees greatly differ from state to state. One of the major reasons for this is the services that title insurance companies perform. In some states, premiums cover both the cost of searching through records and the actual coverage. In other states, the premium only covers the protection.
Title insurance companies also have varying standards when home buyers are charged for services rendered. Some companies require home buyers pay for an attorney or escrow companies. Other companies may charge home buyers separately for title insurance services, even though they perform the actions. Remember that every state have different procedures and regulations, greatly affecting the cost.
Why Home Buyers Should Shop for Title Insurance Deals
Potential home buyers should do careful research prior to committing to one title insurance company. For instance, many home purchasers rely on their real estate agent, mortgage lender, or attorney to select which company to choose. In this case, heavy competition among title insurers cause these professionals to choose based off of who they know. This can lead to title insurance companies overcharging the borrower. However, there are some home purchasers who make their title insurance choice on their own. One great tip for choosing a provider is to search the Internet prior to purchasing property.
Some states that do not regulate title insurance rates include Alabama, District of Columbia, Georgia, Hawaii, Illinois, Indiana, Massachusetts, Oklahoma, and West Virginia. New Mexico and Texas have set rates for title insurers. Other states may have some flexibility with title insurance companies’ rates. This is the reason why it pays to choose wisely before settling with a particular title insurance provider.