Title insurance misconceptions are quite common among home buyers. Apart from being a unique form of insurance, myths about title insurance have been spread, preventing people from understanding the importance of the coverage they need. To help you understand why you need this type of insurance when you buy property, we’ll debunk some of the common myths about title insurance.
Myth 1: I Don’t Need Owner’s Title Insurance
Many home buyers wonder why they should buy their own separate title insurance policy when they’ve already purchased a policy for the lender.
The lender’s title insurance policy only offers coverage that protects the lender from losing their loan investment if an issue arises. Without an owner’s title policy, you may need to spend money defending your rights of ownership in the property. While the owner’s policy is not required, you need it to protect yourself against losses that can occur during an unexpected dispute.
Myth 2: Title Insurance Only Offers Minimal Protection
The amount of coverage provided by any title insurance policy you buy will be clearly stated in the terms of the policy. Title companies provide different types of coverage. Title policies provide coverage for pre-existing issues. These include but are not limited to forgery on vital documents, deed errors, unknown liens and undisclosed heirs. Other issues covered are unknown easements, boundary/survey disputes and adverse possession.
Myth 3: Title Insurance Is Expensive
The title insurance you need as a home buyer is not expensive. It only accounts for a small percentage of your closing costs. Because title insurance is a regulated fee, it costs just a fraction of the final closing fees. You can get a free, no-obligation quote for title insurance from us. We’ll advise you how much the lender’s policy and owner’s policy will cost you, and you’ll see how affordable it really is.
Myth 4: More of the Title Insurance Premium Is Used for Commissions Than Insurance Coverage
This is not so. A large proportion of the money paid for title insurance is used for title research, examination and clearing of title requirements. This means much of the premium is used to prevent loss from title fraud and issues. It’s important to note that the cost of title insurance is a one-time expense, while other types of insurance have recurring monthly premiums.
Title insurance is a very small amount compared to the value of the property. This implies you’re paying a small amount of money now to protect yourself from potential legal fees and other expenses that can occur in the future due to liens and other title issues.
Myth 5: Home Buyers Cannot Choose Their Title Insurance Company
As a consumer, you have a right to shop for the title insurance company you want to work with. You’re fully protected by the law under the Real Estate Settlement Procedures Act. You can advise your real estate agent or lender that you would like to use the title insurance company you choose. This allows you to use reliable title companies like Title Partners of South Florida and benefit from a professional, engaging and memorable closing experience. It’s important to note that your real estate contract will dictate who pays for the title insurance. Generally the party paying for the title insurance will choose the title company.
If you have further questions about title insurance and closing, call 954-566-6000 for a free quote or no-cost consultation today. If you have any questions about title insurance or your closing, feel free to explore our Title Insurance Q&A pageor contact us online today!