Title insurance is designed to provide protection to both mortgage lenders and home owners. It protects both against the possibility of hidden claims on the house or of any defect or flaws in the title. For example, if someone else claims after you have bought your house that your purchase is not a valid one; title insurance can protect both you and your lender against any financial losses arising from this claim.
When buying a There are two types of title insurance policies; a lender’s policy and an owner’s policy. A lender’s policy is to protect your mortgage lender against any financial consequences of issues related to the title to the house in any Longmont Colorado real estate deal. This insurance is mandatory with virtually all mortgage lenders. The coverage expires when the loan is repaid in full. On the other hand, an owner’s policy is designed to protect you, the homeowner, against any title issues. Owners insurance is not compulsory but it is useful to have as protection as long as you own the house.
Another reason your mortgage lender will insist on a lender’s policy is to ensure that the mortgage can be on sold to someone else. All mortgage lenders grant you the original loan (called origination in securitization jargon) and then proceed to sell the loan to another agency or investor so that the funds can be recycled. Quite naturally, the person buying the loan has never seen you and never will but will require assurance that he has a valid lien that is enforceable on your house. Title insurance provides this assurance and, quite honestly, without the title insurance, the loan to you would be unsalable.
The need for title insurance arises because public records relating to title may be incomplete or out of date. When a lender is considering a mortgage to you, he will hire an attorney to carry out a search of the title records to ensure that you do have a valid title to the property but this is not conclusive. For instance, there may be unpaid property taxes for which the county has placed a lien on the house. Or there may be an ex-spouse with a claim to the house who has not signed off on the transaction. Title insurance is intended as protection and will cover the costs of settling these claims including costs and legal fees.
The cost of title insurance depends on the location, the price of your house and the extent of the coverage that you would require. In some states, the rates are established by law and are therefore non- negotiable. All title insurance providers will give you the same quote. Other states do not mandate the rates so if your property is located here, by all means shop around for the best possible rate that you can get. Title insurance has to be paid for only once at the time of closing. Who will pay for it would be a matter of negotiation but if you can get the seller to shell out, so much the better for you.
Some of the real estate deals have an element of risk involved and the title insurance helps cover that risk. If you are looking to buy a home in Nederland CO, Niwot Colorado, or any city for that matter, ensure that you have a title insurance in place just in case.
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