About Title Insurance
Why is title insurance needed?
Title insurance protects the buyer and lender from the financial loss due to title defects or other matters of public record – of which no one may be aware. In addition to purchasing a home, land, or building, you are also purchasing the title to the property – the right to occupy and use the land. Title insurance is different from other types of insurance in that the insured pays a one-time premium instead of periodic payments over time.
What is an owner's policy?
This insurance is issued in the amount of the buyer’s purchase price. It’s purchased for a one-time fee at closing and lasts as long as the buyer or his/her heirs have an interest in the property. As the owner, you are fully protected should a covered title problem arise that wasn’t found during the title search.
What is an lender's policy?
The lender’s policy is usually based on the amount of the loan. It protects the lender’s interest in the property should a title problem arise. It doesn’t protect the buyer. The policy amount decreases each year as the loan is paid and disappears when the mortgage is satisfied.
Why is title insurance needed for refinance or second mortgage?
These are, in fact, new mortgages and a title insurance policy is required by the lender to grant your new loan. The original title insurance only covered the old mortgage – not a second mortgage or one that’s being refinanced. In fact, something may have happened between the time you purchased your property and the time you get your new loan that for which you have no protection. Do show us your original owner’s title insurance policy, as we may be able to reissue it at a lower rate if the insured values are similar.
What’s a title search?
The title is your legal proof of ownership. When you make your real estate purchase, we review the property’s history to see if the title is free and clear of defects before you close. We see if the deed was recorded properly and look for outstanding liens such as those that can arise from court judgments, federal tax estates, wills, and divorces. We also note any covenants, easements, or other matters that will affect your title.
You’ll be presented with a property report that explains the results of our search. We provide title searching and title examination services for new and existing homes, and can issue owner’s and lender’s title insurance for the amount of the mortgage.
What happens at the closing?
This is the day that the property is formally sold and transferred from the seller to the buyer. It’s also the day that the borrower accepts the loan’s obligations, pays closing costs, and receives the title from the seller.
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We attend the closing to make sure that all the documents are prepared and executed correctly, and to explain each document before the buyer signs. We’ll take care of all the documents and details in advance, and let you know what items you need to bring to the closing.
We can host the closings at one of our offices or one of us will travel to the location that the lender, buyer, and seller choose.
What’s escrow?
An escrow is an arrangement in which a neutral third party stores and protects the legal documents and funds on behalf of the buyer and seller. That third party can also distribute the funds according to the buyer’s and seller’s instructions. We are happy to provide this service as well.
Why do I need inspections?
Though we do not provide this service, Closure recommends a variety of inspections so that the buyer and lender can make sure that the property is sound and systems are working.
- Buyers can request inspections of the structure, operating systems, and appliances.
- Septic inspections are done by an engineer to verify that waste-disposal systems are in working order.
- Well water can be tested by an engineer to determine the water quality.
- Inspections are also required for each phase of new construction in order for the lender to release construction funds, and if the structure is newly completed, an inspection can determine if the building is ready to occupy.
- Right before closing, it’s suggested that you take one more look at the property to make sure nothing has broken or been removed since you last saw it.
Do I need a survey?
We strongly recommend that the buyer orders an up-to-date survey of the property. Though we don’t require a survey on most transactions, we feel it would be a good idea for you to know exactly what land you are buying – and where your new neighbors’ property begins and ends.
Home Closings 101
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