During the process of buying a home, it’s pretty common to obtain title insurance; in fact, most mortgage companies will require it. For first-time buyers, the very concept of title insurance is a little foreign; basically, this insurance protects you in the event that there is a dispute or other issue with the transfer of the title from seller to buyer. For example, if a title search reveals a legal dispute that has to be resolved in order for the transaction to clear, your title insurance company will likely pay the corresponding fees.
As you seek title insurance, there are a few key questions you might want to ask, ensuring that you know exactly what kind of insurance product you’re obtaining.
Key Questions About Title Insurance
What kind of coverage do I need?
The first thing to ask your title company: What kinds of coverage are available, and which option is best for you?
Standard title insurance will protect you against things like title fraud, undisclosed heirs, spousal claims, and forgery. There are additional endorsements you can add to your policy, providing you with additional protections; for example, you can add endorsements to protect against zoning, assessments, and more.
Do I have to pay for it, or can the seller pay?
It’s typical for the buyer to purchase the title insurance. With that said, sometimes the buyer and seller work out a separate agreement in which the seller pays for some, maybe even all, of the title insurance.
Which title company should I choose?
Assuming you’re the one paying for the title insurance, it’s your prerogative to select the title company that’s used. Now, you may not have much knowledge of local title companies, or of what makes them distinct; you can always ask your real estate agent for a recommendation.
The one recommendation we’d offer is not to use the same title company the sellers used, back when they bought the property. It’s always good to bring in a different company, ensuring a fresh set of eyes for the title search.
Are prices regulated?
In some states, title insurance policies are regulated. What this means is that there’s not much point in shopping around for a good “deal,” as all title insurance companies are going to charge you basically the same amount.
On the other hand, if you live in a state that doesn’t regulate prices, then there may be some merit to shopping around.
How long have you been around?
Regardless of whether or not price is a factor, it still pays to do your due diligence and ask your title insurance company for their credentials. Specifically, ask how long the company has been in business. Ideally, you’ll find a title insurance company that’s been around for at least 10 or 15 years.
The reason for this is basically that a more experienced company will ensure a higher level of quality in their title search, which can save you from hassle or headache down the road.
Where can I turn for recommendations?
If you’re struggling to figure out which title company to use, there are a couple of places we’d recommend seeking a recommendation. We mentioned above that you can always ask your real estate agent. But another good option is to ask your lender if they have a title company they endorse.
It’s worth remembering that your interests and your title company’s interests are highly aligned on this matter, so you can generally feel pretty good about the recommendation they offer.
Learn More About the Home Buying Process
Title insurance is just one of several key steps in the process of buying a house; as you prepare to purchase a place of your own, you’ll want to be attentive to each detail. That may seem daunting, but we’re here to help; SOLD.com offers many resources for home buyers and sellers alike.
Indeed, if you’re looking to sell your own property, we’d recommend requesting your free SOLD.com seller’s report, which is available to you any time you’re ready. In it, you’ll find customized tips for achieving your real estate goals. Grab your copy of the seller’s report today.