If you’re a newly minted homeowner, you are likely in the process of deciding which additional home-related expenses to make and which types of insurance you need. One essential form of protection is title insurance, which shields property owners and mortgage lenders against defects or issues with a home’s title (a document proving legal ownership) when a transfer of ownership is carried out.
Property titles can often carry defects due to public record errors, unknown liens, encumbrances, or illegal deeds. Title insurance is also different from other types of insurance because it is typically a one-time payment rather than paid on a monthly or annual basis.
Questions Every Homeowner Should Ask About Title Insurance
Title insurance is a rapidly growing market. According to IBISWorld, this industry grew at an average annual rate of 2.7% between 2015 and 2020. Also, the size of the title insurance market was estimated at $16 billion as of February 2020. Title insurance is often difficult to fully understand at first. Therefore, you will benefit significantly from conducting fundamental research on this subject before rushing to purchase the first title insurance option you are presented with. Here are three important questions to ask about this type of indemnity insurance.
How Much Coverage Do I Need?
Before anything else, it should be noted that title insurance typically includes two policies: the lender’s and the buyer’s. Owner’s policies generally cover many different types of contingencies, including forgery, fraud, and spousal claims.
In some cases, however, your lending institution may demand additional insurance. For instance, an adjustable-rate mortgage (ARM) can assure that the lender is the first to be reimbursed should your property enter into foreclosure. Ultimately, you should only pay for the amount of coverage you can afford and that you think you may truly need given the area and circumstances you live in.
Who Pays For Title Insurance?
The answer to this question may vary depending on the specific laws in the state or county that you reside in. In certain regions, you may be forced to pay for both policies, while in others, you may only need to pay for one. Nevertheless, you can potentially negotiate the total cost in certain cases. Special discounts may also be offered during certain seasons (e.g. during times of high economic uncertainty and instability), so be sure to look out for these offers.
Are Prices Regulated?
Prices for insurance are frequently regulated in many states. Therefore, you will likely find very little difference between the rates offered by one company compared to those offered by another firm.
However, there are still two aspects of title insurance you should always closely observe whenever you are considering an option: the quality of the title search and the quality of the insurance itself. It’s also imperative for you to inquire whether you will have to pay any additional fees (e.g. wire transfer fees), as these can easily add up.
There are various other questions you can ask before purchasing title insurance, including, “how much reassurance do I need that the underwriter issuing my insurance policy is sound (and that my lender or insurer won’t go under)?” You should also take note of whether the seller is aggressively pushing a particular title company. Whether you have an ARM or a fixed-rate mortgage, take time to gather as much information about title insurance as possible. As a homeowner, you have every right to understand exactly what you’re paying for and to know about all of the different choices available to you.
Work With The Title Insurance Professionals
Speak with the experts at Mathis Title Company in Fairfax, Virginia for more information about title insurance and its benefits. We serve many areas throughout Fairfax County, including Alexandria, Arlington, Centreville, and McLean.
Robin Mathis is an attorney who has more than 35 years of experience in real estate settlement services and who has performed thousands of closings, both residential and small commercial. Robin is highly knowledgeable about both the buyer and seller sides of real estate transactions.
If you are looking to acquire title insurance and feel overwhelmed and confused, the team of professionals at Mathis Title Company will be here to guide you through every step of the process. We will always ensure that you are treated fairly and that you are not paying a single cent more than you need to. Call Mathis Title Company today at (703) 214-4020 or contact us online to learn more about our other services, which include drafting purchase agreements, mechanics liens, refinancing, and settlement-related services.