When committing to the major purchase of a new home, many buyers are looking to cut costs and paperwork where they can and may want to skip buying title insurance as a result. The title insurance process is easy with a good team, less expensive than a home buyer may think, and provides a homeowner with the peace of mind they don’t know they need until a complication with the title appears. What does the title insurance process look like and what does a homeowner need to know to make it work best for you?
Why do you need title insurance?
It should be noted that the title insurance is automatically included by law at closing and is more protection for the lender than for the homebuyer. If there is an issue requiring the sale of property be voided, the lender receives their money and the homeowner is not on the hook for the remainder of the mortgage, but unless you also have an owner’s insurance policy you have the loss of the property and lose the investment you have put into the property. Having both a title insurance policy and an owner’s policy is essential to protect the lender and provide you with protection as well.
How much is this going to cost me?
Title insurance is regulated by Florida law. In most Florida counties the seller is responsible for paying for title insurance and as the payer determines what title insurance company to use, but this is negotiable at the time of contract. The standard Florida rate is $5.75 per $1,000 of coverage up to $100,000 ($575 on a $100,000 home), $5 per $1,000 of coverage for houses between $100,001 and $1,000,000, and continues to scale based on purchase price. Unlike most insurance policies, this is not going to be a monthly or even an annual payment. It is a one-time fee that is paid at the beginning of coverage, either at the time of closing or at the time of refinancing, and is effective for the duration of the policy owner’s property ownership.
What is the title insurance process?
After the initial contract of intent to buy is signed by seller and buyer, the buyer makes the escrow deposit and a request is made for the title to the closing attorney. This request includes identification of parties involved and the property, the purchase price, lender information, exiting mortgages, and a signed copy of the purchase agreement.
Documentation regarding taxes, assessments and fees, hazard insurance, surveys, and loan payoff statements is gathered. The title insurance underwriter conducts a title search in the property’s county public records for possible clouds, or issues that need to be cleared before the transfer of property. The title search reviews deeds, mortgages, judgments, divorce settlements, and other public documents. The closing attorney reviews the title search report along with all other documents and if the title is clear he issues a title commitment to the buyer or lender.
The closing attorney prepares all documentation for the clear title property to close. Copies of the deed, bill of sale, lender instructions, and other closing documents are submitted to all parties for approval. Upon closing, the title insurance will be effective.
There are a lot of moving parts in the title insurance process. Not all companies provide the same service level. As government agencies and the industry moves to greater electronic dependence, it is essential to choose a company that not only safeguards your property rights, but safeguards your private information as well. Choose a title insurance company committed to using ALTAS best practices.