A title insurance policy is an insurance product that protects the insurred's legal and equitable rights in real property. It is insurance coverage that protects against defects, claims or problems associated with the title to a property by placing the assets of the title insurance company / underwriter behind the title to the property. There are two types of title insurance: Owner's title insurance and lender's title insurance. The cost of title insurance is usually a one-time fee paid by the buyer at closing.
New owners of homes need title insurance because it protects them from any legal issues associated with the title of their new home. A property goes through many owners in its lifetime, and if there is a problem with any one of these title changes, it can cause problems for you, the new owner of the property title. The title insurance policy will also protect the homeowner against items that would not be revealed during a property title search. Title insurance cost is minimal compared to legal fees or other fees that may occur from an error in the title transfer of the home, so getting title insurance is a good investment.
If you obtain a mortgage you will be required by your lender to purchase a loan policy of title insurance when you close on the loan. Even though the title record for the property has been checked by your real estate attorney or the title company, you will often be required to get title insurance just in case a legal error was missed. If you have not already paid the title insurance cost during the closing process, your mortgage lender may help you buy title insurance.
Title insurance cost is usually paid in a one-time fee during closing because, unlike other types of insurance, title insurance covers loss that is incurred before the policy is purchased. This means that title insurance covers legal errors, liens or other claims on the property that were incurred before you purchased the property. Even if these legal issues are discovered after you have purchased the home, title insurance makes sure that you won’t have to pay for them.
The title insurance costs paid at closing vary depending on the state in which you live as well as some other factors. Generally, the owner's title insurance fee is around 0.3 to 0.5% of the total purchase price of your new home. The lender's title insurance cost can range from either $100 or from $2.00 to $5.00 per thousand of the loan amount. Your mortgage broker or realtor can recommend a title company (a title insurance agent) that will sell you the title insurance as part of the real estate closing. In order to locate the lowest title insurance costs, as with other insurance, it pays to shop around.
Titlle insurance premiums and title insurance costs vary significantly from state to state. This is caused by two factors. First, the title insurance companies are regulated at the state level typically by each state's insurance commissioner that require the title companies to estabish set firm rates for each title insurance policy. Second, the levels of coverage and services included within the cost of title insurance vary by state as well.