A title company is a type of service that helps you ensure that a title to some piece of property or real estate is completely legitimate and also provides you with title insurance for that same real estate. With this insurance, whether you are the owner or the lender of the property you will be protected from any kind of claims or lawsuits that are related to any kind of title dispute. It can also cover any of the damages that might happen when there is an error in the ownership records of the property. Most people usually get this kind of insurance when they get a mortgage.
Most of these types of companies also hold an escrow account which is used to hold the money that can only be used to make the final step of closing the home. When the last step of the closing is finally going to happen, an agent from this company will bring all the needed documents, answer any questions to both parties and then collect any costs that are needed for the closing. After the whole process has ended, the company will then make sure that all of the new documents and titles are filled with the right information.
What does Title insurance mean?
Title insurance is offered by a company that is willing to pay the policyholder if there are any kind of errors in the titles related to real estate. In many countries, including the United States, you cannot hope that the one who records all of the deeds that are related to your property will be perfectly accurate. You also cannot expect that all of that information will be held safely throughout the years.
So, if you want to avoid any kind of future risk and the chance of someone trying to claim your brand new home just because they have some old documents related to your estate, you should definitely insure it. In other words, to insure your title means that the company will do everything in its power to perfect and correct all of the information regarding your documents.
If you lose any kind of rights regarding this property, then with such insurance, the company will be obligated to pay you back in full. According to Bay Title Company, when you lose rights for a property while under title coverage, there is a chance that you will be paid a lot more than the property’s worth.
You can get this type of service either as the homeowner or as a lender that pays for the mortgage. However, most lenders will ask of you to pay for this type of insurance when they give you their mortgage closing contract. While getting this insurance as a homeowner is completely your choice, and any of the two parties can buy it, it really depends on the deal they come to. If you ever feel like the insured period you first purchased is not long enough, you can always extend it for much longer.
So, do I need it?
Well, it mostly depends on the situation you are in. If you are a part of a mortgage process then someone will definitely have to pay for title insurance. But, even if you are a homeowner, we recommend that you also get this kind of coverage. This coverage can help you cover damages in various situations.
You will be protected if there has been any unreported security interest regarding the property. You will also be safe from any forged documents and fake ownership rights that have been processed in the past. Any errors that can be found during the recording and filling of the documents will be taken care of which means you won’t get into any kind of trouble for such a thing.
You might be thinking that not a lot of people get into a situation to make any kind of claim to their title insurance companies, but there is still a chance of it happening. So, the question is, would you risk your money and your real estate to save up on some cash? Instead of paying thousands or even tens of thousands of dollars because one simple mistake on a document regarding your real estate, you can just hire a company for a fraction of the price that will ensure that you will never get into such a problem.
How much does it cost?
A lot of people avoid paying the cost of a property coverage as it seems a bit too expensive, but when you consider how much you can be fined for real estate document errors, it really is the smartest way to go. Most reliable companies will offer you coverage from anywhere between $600 and $1,500, although that heavily depends on the country, state and where your property is located.
Location is probably the biggest influence on the cost of insurance. While some states have lower standards and an easier process to fix any document related errors, other states will require from the company much more investment in both time and money. Naturally, if the company is paying the state more and spending a lot more time to fix all the errors with the documents regarding your property, then you will have to pay a bigger price to the company too.
However, these costs we mentioned are usually for lender policies, the homeowner title insurance can be a bit more expensive. If you are paying coverage for yourself then you will probably have to give something between $800 and $2,500$.
Other things that factor in the price of title coverage are your credit score, loan amounts, and the down payments. You might be thinking to skip paying such a big sum on this coverage as a homeowner, but the policy usually does not have any expiry date, so you will be protected for a very long time. Well, at least until you finally decide to sell your house and move on to another property.