Insurance plays a key role in home ownership. Making sure you have all of your ducks in a row really isn’t optional if you want things to go well. At New Frontier Homes, we have decades of experience with building and improving homes, and we’ve gotten to know a lot of the aspects that confuse people, and insurance is one of those things. In our last blog, we discussed title insurance, including its basic definition and who pays for which part. In today’s blog, we want to discuss a few more basic facts about title insurance. Read on!
How much does title insurance cost?
The cost of title insurance is determined by the price of the property. For instance, if your property costs $250,000, your title policy will probably be around $1,000. On the other hand, if your property costs above $500,000, you’ll probably pay around $2500. Other aspects impact the cost of your title, including re-issue rates, bundled rates, discounts, and rates for developers and builders. You’ll see the title insurance show up in your closing costs, usually on the HUD 1 settlement statement.
Can you get different types of title insurance?
Beyond the buyers and lenders policies discussed in our first blog, there aren’t any other kinds of title insurance. One thing to note is that the lender’s policy puts the lender in the first position in the case of a judgment. This only changes if the buyer pays cash because cash eliminates the need for a lender policy in the first place.
What does the policy mean by “my property”?
Too often, people assume that a title insurance policy covers their property as defined by their street address. Unfortunately, this is not true. Title insurance covers the legal description of your property only. It can be very long and descriptive because it has to literally express what is being transferred in a sale. It may include parcel numbers and plat maps.
Who chooses the title company?
Whoever pays for the product gets to choose the provider. That means that if the buyer is paying, the buyer gets to choose, and if the seller is paying, the seller gets to choose.
Is title insurance necessary if I’m paying cash or purchasing a house from friends or family?
The title policy isn’t required when you’re paying cash or working with family and friends, but it’s a very good idea. It is an effective way to ensure the past, proclaiming that the title company did their work, and because it’s a fraction of your home’s total cost, it’s a smart option.
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