What should I know about Title Insurance Companies
Purchasing a home is most likely one of the most important decisions you are ever going to make. Chances are that you're going to be dealing with a number of people, including realtors, sellers, mortgage brokers or bankers, insurance companies and attorney's that you have never met before and may never have the opportunity to work with again once you buy your home.
But, how do you know when you're buying a house that the property you are purchasing has a 'free and clear' title? Chances are you don't! All sorts of problems can be hidden away in the history of your new homes title - some that you may never discover until you go to sell the home or refinance it. These problems are often found in public records and may be the result of (a) unpaid mortgages, (b) wills, (c) divorce decrees, (d) court judgments, (e) tax claims, (f) mechanics liens, or (g) other claims on the property.
A title insurance company will routinely search public records and title insurance pays for the ability to search for problems that may exist in public records. This search will give you an assurance that your property is turned over to you without outstanding debts, taxes or other ownership issues that might be associated with your home. In addition, a title insurance company assures that as long as you own your property, if a problem should arise, that any legal fees that might be incurred by you as a result of this claim will be covered under your title insurance policy.
Most people do not know that they do not have to accept the title insurance that their mortgage company (or bank) is offering them. This simply is not true! You have the right to shop for your own title insurance policy and you can do that simply by seeking out the best policies at the best prices. Typically title insurance is built into your closing costs and often, when you are buying (or refinancing) your home, you're liable to not even take notice of it. However, like any other insurance company, most title insurance companies offer you the ability to obtain competitive rates and you have the right to select what company you want (and the price you want to pay).
When you are shopping for title insurance you should know the following things:
A) Contact more than one company and compare costs
B) If the property you're purchasing has been sold in the last 5 years, check with the company that currently holds the policy to see if they will offer you a discount
C) First time home buyers are often eligible for a discounted rate
D) Check with your homeowners' insurance company and see if they offer title insurance. Often, insurance companies offer discounts if you hold more than one policy with them;
E) Title insurance should cover your full purchase price, even if the value of the home is less than the purchase price
As with any type of insurance, you need to be an active consumer and make sure you are getting what you pay for.