5 Quick Title Insurance Facts

Title insurance can be a confusing aspect of a real estate purchase for many home buyers. What is title insurance? Why do I need it? What exactly am I paying for? To cut through some of the confusion here is title insurance in a nutshell:

1. Title insurance protects the home owner's financial interest in the property against losses from title defects, liens, or competing claims of ownership.

2. There is a one time title insurance fee charged at closing, and varies based on the value of the property, the location of the property, and the company providing the policy.

3. A lender's title policy will protect the mortgage lender's financial interest in the property, and an owner's title policy will protect the owner's. In order to approve a mortgage loan the lender will generally require the purchase of a lender's policy.

4. The Real Estate Settlement Procedures Act (RESPA) entitles a home buyer to choose their own title insurance company - a mortgage lender or bank cannot require that a particular company be used.

5. The cost of the policy is sometimes lower when another policy on the property was recently issued.

Additional Resources:

Who Is Who In A Mortgage Loan
Mortgage Application Checklist
The Mortgage Process
Mortgage Education Center

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