If you're looking to buy your first home, you may be feeling a little overwhelmed at the costs involved. Not only do you need to pony up money for your home's down payment, but you may also be responsible for some or all of your closing costs. Furthermore, there are loan origination fees and other costs related to taking out a mortgage that you'll need to keep in mind. One of those costs is that of title settlement and title insurance.
You Definitely Need It
Essentially, title insurance is designed to protect you in a court of law should any issues regarding your new home's title arise after closing. Yes, your mortgage settlement company and underwriter will research the home's title extensively before closing to ensure there are no defects, but there is always the possibility that something could come up after closing. Should anybody challenge your title to the property, your insurance coverage will kick in and even compensate you if you lose in court.
No matter how clean your home's title may seem, most mortgage lenders will require title insurance in order to approve your loan, so it's a cost you'll need to budget for.
There Are Two Different Policies
When purchasing title insurance, there are two policies to consider with any home transaction. First, there's the aforementioned buyer's policy. However, you'll also need a lender's title insurance policy, which will also protect your mortgage lender from costs related to legal defense regarding the home's title. Who is responsible for paying what can vary from one transaction to the next, but you should generally expect to at least pay for one policy.
State Laws Regulate Costs
Costs of title insurance can vary and are regulated at the state level, so check with your state authorities or your mortgage lender to get a better idea of what you can expect to pay for coverage. You can contact services like Whitford Land Transfer to learn more about what rates you can expect.
You Have the Right to Choose
Finally, keep in mind that if you're the one paying for your title insurance policy, you have the legal right to shop around for coverage. Your lender or even the seller may recommend a specific company, but if you're paying, the ultimate choice of who to go with is up to you.
Title insurance is an important part of any real estate transaction. Be sure to keep this information in mind as you prepare to close on your first home.