Six Questions Every Home Buyer Should Ask About Title Insurance

Home Buyer Questions
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Insurance serves an important purpose in every aspect of life. It is a great tool that protects you from a financial crisis, especially when you invest in real estate. Title insurance ensures that your investment does not lead to financial losses when you invest in real estate. It is a vital tool that every buyer must have to protect themselves, as well as the mortgage lenders, from a financial crisis.

Understanding Title Insurance

In simple terms, title insurance is an insurance that protects the holder from any financial loss incurred due to defects in the title. These defects can be unpaid taxes, an incomplete certificate of occupancy, and unresolved legal debts, among others. It is a one-time fee paid in the form of insurance that can be claimed by filing against a title with defects.

Issuing title insurance is done in two parts. First, the attorney or the title company researches records to ensure that the title of the house is clean, and that the seller is free to sell. Next, an underwriting company is contacted to prepare a contract and issue the insurance policy. Make sure you ask the following questions about title insurance before you buy one.

Read our full title insurance guide for more information about title insurance in Florida

Six questions you must ask about title insurance

A homebuyer typically must make two types of insurance policies, namely the owner’s policy and the lender’s policy. But before making them, here are five questions you must seek answers to.

Are the prices of the title insurance regulated?

Title insurance prices are regulated in some states and do not show much difference in price from company to company. Title companies may add other costs, such as ancillary expenses, in the bill, along with the insurance cost. In the state of Florida, the title insurance cost is regulated by the Florida Department of Finance.

What is the coverage that I will need?

The coverage that you will need depends on the type of title insurance that you are paying for. The owner’s title insurance protects you against contingencies like forgery, fraud, spouse claims, and undisclosed heirs. You can also buy additional coverage for several other contingencies. Your lender, on the other hand, may require additional insurance on the mortgage or the property.

Who pays for the title insurance?

The responsibility of paying for the title insurance differs from one state to another, as well as from one country to another. In the state of Florida, the person responsible for paying for the title insurance depends on the county, and this can be negotiated in the contract.

Whom should I trust if someone is pushing a specific title company?

While buying a home, you will get suggestions from everyone- your mortgage lender, real estate broker, as well as the seller. The question is, whom to trust? If you are paying for the title insurance, you make the decisions, and you will choose the company.

How much reassurance would I need?

The ideal step to reassure yourself is to contact the title company directly and ask for a copy of their state license instead of feeling anxious. You can also verify online the licensing status of the title company issuing your policy, by visiting the Florida Department of Financial Services Licensee Search Tool.

Title insurance can protect you from an unexpected financial crisis. It is not an expense, but an investment!

How Much is Title Insurance?

The cost of title insurance is directly tied to the price of the property being traded, and/or the value of the mortgage being taken if it’s a refinance transaction, or if there is a lender involved. The formula to calculate title insurance rate in Florida is regulated by the Florida Department of Finance, but if you are closing on a property, there are other closing-costs that you might want to consider. You can read our guide to closing-costs to understand more about the items you are charged for, or simply use use our quick and easy closing costs calculator to get an estimate of your title insurance premium, and some other fees and charges you should be aware of.

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