October 8, 2015 2:00 am
Many factors play a role in the process of purchasing a home – none understood less than title insurance. Put simply, title insurance protects your investment from title issues that may arise after buying or refinancing a home, such as lost, forged or incorrectly filed deeds or liens on a property, according to the National Association of Insurance Commissioners (NAIC).
To gain a clearer understanding of title insurance, take a look at the facts recently shared by the NAIC:
• Lenders typically require title insurance; however, you are not required to use their recommended title company or agent. Keep in mind that by federal law, affiliated (referral-based) relationships must be disclosed to you in writing.
• Title insurance can be purchased from a licensed title insurance company or agent. Attorneys may also have the authority to sell title insurance, depending on their jurisdiction.
• When comparison shopping, inquire about services and fees, both included in the title premium and not. Be sure to ask about discounts.
• When selecting a policy, take time to assess your options. As stated above, your lender will likely require a lender’s policy for the amount of the loan, which protects the lender from title issues that may occur after buying the home. Though you may have to pay the policy premium, coverage will decrease as the mortgage is paid off.
• Though you are not required to buy one, an owner’s policy for the full price of the home (and potential legal costs) protects you if title issues emerge after purchasing the home. Coverage will remain as long as you own an interest in the home.
• Depending on your area, you may also have the option to purchase an enhanced owner’s policy, which covers approximately 20 percent more than a standard owner’s policy.
• Policy endorsements may be available to you, as well. An endorsement, which you may or may not have to pay for, covers a specific issue, such as a mechanic’s liens.
Published with permission from RISMedia.