Buying a home can be tricky, especially if there are problems with the title. To better assist you with your real estate transaction, we’ve put together a guide to title insurance to ensure a smooth closing.
Homebuyers Guide to Title Insurance
What is a Title?
The title is an official, legal document that gives the owner legal rights to a property. It gives the owner the authority to use and enjoy their property — within the legal parameters defined in the document.
Why do I Need a Title?
A clear title will ensure previous owners don’t have rights to the home, and owner is not responsible for old debts associated with the full property.
Who Can Help?
Title service professionals work with homebuyers and sellers every day and are experts at researching properties for potential problems and helping to provide a better closing experience. They work hard to reduce the risk of any future issues regarding the property, going into great detail to ensure a clear title.
From underwriting to escrow services and all the way to closing, highly-trained professionals make the experience as smooth as possible each step of the way.
What is a Title Search?
The title search occurs early in the process. An experienced title professional will conduct a thorough dive into the history of the property to uncover problems in such areas as:
- Existing Liens on the Property — such as unpaid debts or property taxes
- Illegal Deeds — including owners that were listed as single but were actually married
- Public Record Errors — such as mistakes in the recording of surveys for property boundaries
- Forgeries — fabricated documents that place ownership in question
- Undiscovered Will — a previously deceased owner’s will may come to light years later
It is important to contact title service professionals as soon as you can once you have decided on the right home for you. Title searches are quite complex and getting a head start will provide extra time to deal with any issues that may be discovered so you can have a less stressful, efficient closing experience.
What is Title Insurance?
Title insurance protects the homeowner’s rights to the property. There are actually two types of title insurance:
- The Owner Policy: purchased by the homebuyer or seller for the buyer and protects their rights and financial future
- The Lender Policy: purchased by the buyer and protects the lender’s interest in the transaction if there will be a new mortgage
Title insurance is the best way to safeguard not only the owner’s legal rights to the property for as long as they own it, but also protects them financially too. If an issue comes up after signing, not having title insurance could cause a tremendous amount of stress and financial difficulty. If the owner didn’t purchase title insurance and a problem comes up such as fraud, clerical errors, or forgeries, they may lose their home.
How Much Does Title Insurance Cost?
Title insurance is different from most types of insurance in that it is just a one-time cost. There are no recurring payments like health insurance. The payment can be made either before closing or while at the closing table. The total cost varies from several hundred to an average of about $1,000 for each policy (Owner’s & Lenders). The amount is directly related to the property, and the variables that can affect the cost include:
- Purchase price or loan amount
- State regulations and fixed fees (if any)
- Negotiations with the seller on portions paid
- Negotiations within the full components of the policy.
- Any available bundle discounts
- Additional coverages desired above standard coverage
States such as Florida and Texas have regulations where title insurance premiums are fixed by the government. Working with a trusted title services company makes the process simple, secure and smooth — offering personalized protection.
The one-time, affordable costs of title insurance are minimal compared to what could happen without it if a problem with the rights (or previous liens) of a property comes up after closing.
What Happens at Closing?
When partnering with a respected, experienced title services company, you can be confident that the process will be more efficient and thorough.
During the closing, all of the documents will be reviewed and signed. The deed of ownership (the title) will be transferred from the seller to the buyer. Once all of the funds are appropriately distributed, the closing is complete.
A Better Closing Experience
Buying a home doesn’t have to be complicated. Title service professionals are there to make the process as seamless as possible.
Don’t think you own. Be sure. For more information on title services, contact BNTC today. We strive to make your closing one you remember for unparalleled service, thoroughness, and efficiency.
We serve the people of Florida, as well as across the US. At Bay National Title Company we bring you peace of mind and a better closing experience.