Buying a new home is one of life's most gratifying experiences. As you approach the big day of closing, however, all the details can be a little overwhelming. You might easily overlook the single most important step in the entire process -- the purchase of Title Insurance on the wonderful new home of yours.
What is a Title?
A title is the evidence, of right, that a person has
to the ownership and possession of land. It is
possible that someone other than the owner has a
legal right to the property. If that right can be
established, this person can claim the property
outright or make demands on the owner as to its use.
Do I need Title Insurance?
Most definitely! Title insurance is a means of
protecting yourself from financial loss in the event
that problems develop regarding the rights to
ownership of your property. There may be hidden
title defects that even the most careful title
search will not reveal. In addition to protection
from financial loss, title insurance pays the cost
of defending against any covered claim.
What can make a Title Defective?
Any number of problems that remain undisclosed after
even the most meticulous search of public records
can make a title defective. These hidden "defects"
are dangerous indeed because you may not learn of
them for many months or years. Yet they could force
you to spend substantial sums on a legal defense,
and still result in the loss of your property.
But the lender already requires Title
Insurance, won't that protect me?
Not necessarily. There are two types of Title
Insurance. Your lender likely will require that you
purchase a Lender's Policy. This policy only insures
that the financial institution has a valid,
enforceable lien on the property. Most lenders
require this type of insurance, and typically
require the borrower to pay for it.
An Owner's Policy on the other hand is designed to protect you from title defects that existed prior to the issue date of your policy. Title troubles, such as improper estate proceedings or pending legal action, could put your equity at serious risk. If a valid claim is filed, in addition to financial loss up to the face amount of the policy, your owner's title policy covers the full cost of any legal defense of your title.
How much does Title Insurance cost?
The one-time premium is directly related to the
value of your home. Typically, it is less expensive
than your annual auto insurance. It is a one-time
only expense, paid when you purchase your home. Yet
it continues to provide complete coverage for as
long as you or your heirs own the property.
When should I look into purchasing Title
Insurance?
Call First National Title Company as soon as you and the
seller sign the earnest money contract. With a brief
summary of the details, our team of title experts
will begin a search of the public records and issue
a title commitment. Because there are a number of
steps we must take to make certain that we know all
we can about the title, it is wise to get the ball
rolling as soon as possible.
Should I shop around for the best Title
Insurance deal?
Some states closely regulate rates. Others permit
open competition, often resulting in significant
differences between title insurers on rates and
coverage. Depending where you live, it pays to
investigate your options carefully in order to
obtain the most complete coverage.
Can my title company handle the closing?
Yes, in most areas of the country. First National Title Company and its agents act as a central clearinghouse
for the parties involved -- collecting necessary
documents, insuring adherence to the lender's title
instructions, making arrangements for proper payment
and distribution of funds. We are fully prepared to
work with you from the beginning of your transaction
all the way through to conclusion.