Posted on: 05th Mar, 2007 01:46 pm
One lender I was taking estimates from talked about title search would be required and that there will expenses for title insurance policy. I would like to know more about it and how much will it cost, will the lender himself do the title search.
Hi,
Welcome to Mortgagefit discussion board.
A title search will work as assurance for you & lender that the seller is the actual owner and there are no liens or claims against the property. The search is not performed by the lender instead it will be done by any title or escrow company.
Lender will require a title insurance policy to get insured against any error that might occur in the title search. If any problem occurs then this insurance policy will cover his investment. You will have to pay for the cost of this title insurance policy which is normally based on amount of the loan. But you can negotiate payment of a part of the premium by the seller.
This title insurance policy which the lender requires covers only his investment and is also known as Lender’s Title Insurance Policy. The cost varies by state and the amount can range from $175 to $900 on a $100,000 mortgage depending on which state you are in.
Do let me know if you have any other questions.
Thanks
Blue
Welcome to Mortgagefit discussion board.
A title search will work as assurance for you & lender that the seller is the actual owner and there are no liens or claims against the property. The search is not performed by the lender instead it will be done by any title or escrow company.
Lender will require a title insurance policy to get insured against any error that might occur in the title search. If any problem occurs then this insurance policy will cover his investment. You will have to pay for the cost of this title insurance policy which is normally based on amount of the loan. But you can negotiate payment of a part of the premium by the seller.
This title insurance policy which the lender requires covers only his investment and is also known as Lender’s Title Insurance Policy. The cost varies by state and the amount can range from $175 to $900 on a $100,000 mortgage depending on which state you are in.
Do let me know if you have any other questions.
Thanks
Blue
I would like to mention that you can buy an Owner’s title insurance policy to secure your interest against title problems as Lender’s policy covers only his interest.
Thanks both of you for the details, what this owner policy will cover?
Hi Croft,
Actually there are two options for an owner’s title policy coverage, one is called the Basic Owner’s Title Insurance Policy Coverage & the other is an Extended Owner’s Coverage.
The basic policy provides coverage for clear property title, coverage against any type of fraud or forgery, defective recordation, incorrect signatures on documents and judgment liens. While if you get an added extended coverage then it will provide protection against variety of encroachments & forgeries after the insurance is issued, violation of building permit by previous owners or structural damages from mineral extractions.
While getting an owner’s policy check which title insurance company is providing the policy with least number of exclusions from coverage as possible. All policies list the exclusions where insurer will not pay for a certain kind of title problem. The number of exclusions listed there is less amount of coverage that you get.
David
Actually there are two options for an owner’s title policy coverage, one is called the Basic Owner’s Title Insurance Policy Coverage & the other is an Extended Owner’s Coverage.
The basic policy provides coverage for clear property title, coverage against any type of fraud or forgery, defective recordation, incorrect signatures on documents and judgment liens. While if you get an added extended coverage then it will provide protection against variety of encroachments & forgeries after the insurance is issued, violation of building permit by previous owners or structural damages from mineral extractions.
While getting an owner’s policy check which title insurance company is providing the policy with least number of exclusions from coverage as possible. All policies list the exclusions where insurer will not pay for a certain kind of title problem. The number of exclusions listed there is less amount of coverage that you get.
David
Croft,
One suggestion for you.
If the house was not owned by the seller for many years before he decided to sell it to you then you should talk with the title company which provided insurance coverage to the seller.
Since the time between the title search done when the seller purchased the property and now when you would be buying it is short, you may get a re-issue rate.
The premium on a re-issue rate will most likely be lower than what it is on a new policy. It is possible as the insurer would consider the property has lower insurance risk if no claims were made against the title from the time previous title search was done.
Miller
One suggestion for you.
If the house was not owned by the seller for many years before he decided to sell it to you then you should talk with the title company which provided insurance coverage to the seller.
Since the time between the title search done when the seller purchased the property and now when you would be buying it is short, you may get a re-issue rate.
The premium on a re-issue rate will most likely be lower than what it is on a new policy. It is possible as the insurer would consider the property has lower insurance risk if no claims were made against the title from the time previous title search was done.
Miller
Croft,
One other thing for you. Depending on what state you are in, the seller will sometimes pay for the owner's policy, while you pay for the lender's policy.
Even if you do end up having to pay for both policies, check with the title company for "simultaneous issue" rates and discounts. Many companies offer a discounted rate (often to the tune of only 100 or so) when you purchase both at the same time.
Again, title insurance varies so widely from state to state, it's going to be hard to know exactly what to expect unless you got to a state specific forum.
One other thing for you. Depending on what state you are in, the seller will sometimes pay for the owner's policy, while you pay for the lender's policy.
Even if you do end up having to pay for both policies, check with the title company for "simultaneous issue" rates and discounts. Many companies offer a discounted rate (often to the tune of only 100 or so) when you purchase both at the same time.
Again, title insurance varies so widely from state to state, it's going to be hard to know exactly what to expect unless you got to a state specific forum.