You might not know anyone that has collected from their title insurance policy, but that doesn’t mean that it’s all right to skip it. You might think that it’s unnecessary and hate paying it, but it’s even more important in today’s housing market.
Title insurance is available in separate policies for both the lender and for the owner. The lender’s policy makes sure that they have top priority over any property claims. Then there is an owner’s policy that you can add for your personal protection against fraud.
Even though you will have to pay whatever your lender charges for their title insurance, you can save some money on your owner’s title policy by shopping around to find a good price. There’s a good chance of getting a discounted rate if you buy both the lender and the owner policies together.
There are discounted rates for properties that were refinanced or purchased within the last five years. Check what your state offers. You can make your home purchase more affordable by negotiating a better rate for your title insurance. Remember to just find a better rate and don’t skip it all together – that is a big mistake in the long run!
Because of the financial crisis, mortgage fraud is even more prevalent than in years past. The FBI has reported on a type of fraud where fake deeds are notarized and recorded. Owning title insurance would keep you safe in a situation like that.
Developers still want to get a profit and they don’t always go about it legally. Some home owners in Texas were wishing they had title insurance when they paid cash for homes. Using cash meant that no mortgage lender checked on the title policy and the developer had liens against their new homes. Now they face a good chance of losing their homes.
Title insurance can be especially important if you are buying a foreclosure property. In 2009 there was a case in Massachusetts where the court gave the home back to the owner who neglected to pay his loan. The court decided that the original mortgage was improperly transferred to the bank so the person who bought the foreclosure property could not have it either. Title insurance can keep your property from being given back to the previous owner.
Cutting corners, flat-out fraud, and sloppy procedures are growing, and title insurance can save you from losing your property.
