Title insurance is a measure to protect the buyer and issuer of a mortgage loan from title problems during the transfer of a property. If a title dispute occurs, the policy would pay for legal damages – depending on the coverage.
New home buyers are tasked with a number of financial decisions before closing on their home, and some forget to address the issue of title insurance. If you are getting ready to purchase title insurance, here are 6 questions you should ask. These questions will give you a better idea of the coverage you need and what you should look for in a title company.
Is the price of title insurance regulated?
Title insurance rates in the state of Texas are regulated, and that goes for most other states too. You wonâ€™t see much of a price difference between insurance companies. Even though there is not much of a price difference, a smart consumer should look at two factors when choosing a company: the quality of the title search and the policy.
The title company searches through property records to ensure there are no clerical errors, undisclosed heirs, mistakes in record examination, fraud or unknown liens. The search ensures the seller owns the property and is within their legal right to sell it. You should find a company that is trusted within the community to do a thorough search.
How much title insurance coverage do I need?
The average title insurance policy is relatively standard. Ownerâ€™s policies protect against many contingencies like undisclosed heirs, fraud, and forgery. If you want even more coverage, the cost will increase. Some lenders will require additional coverage on your property or mortgage.
Who usually pays for title insurance?
In most residential property transactions in the state of Texas, the seller pays for the ownerâ€™s policy and the buyer typically pays for the lenderâ€™s policy. The party responsible for buying the two policies varies from state to state. This part of the transaction is negotiable. If you purchase both policies from the same company, there may be a discount.
Can the seller push a specific company?
If you are paying for title insurance, you can select the title company. If you are not paying but want to choose the company, you will likely have to share in the costs. A fresh set of eyes could bring problems to light so you may want to use a different company than the seller used.
Who can I trust to guide me?
Look to your lender for advice. You share the same interest as your lender, as you both want things done right the first time. The lender is giving you a large amount of money based on the assurance that the property being used as collateral really belongs to you.
How much reassurance will I need?
Banks and insurance companies usually stick around for quite a while, but they sometimes go under. If you want to verify the underwriter issuing your policy is sound, check their financial solvency with companies like Demotech Inc. or Fitch Ratings.
Search the title company and underwriter online to see what customers have to say about their service. Look for experience, excellent customer service, and stability. Covenant Title Company, a subsidiary of FirstBank Southwest, has been providing title services since 1997. We have underwriter relationships with Alliant National Title Insurance Company and National Investors Title Insurance Company. Our skilled professionals have a combined experience of over 100 years. Contact Us with any questions you may have about insurance.