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Securing Title Services
Title insurance is usually required by the lender to
protect the lender against loss resulting from claims by
others against your new home. In some states, attorneys
offer title insurance as part of their services in
examining title and providing a title opinion. The
attorney's fee may include the title insurance premium.
In other states, a title insurance company or title
agent directly provides the title insurance.
Owner's Policy.
A lender’s title insurance policy does not protect
you. Similarly, the prior owner’s policy does not
protect you. If you want to protect yourself from claims
by others against your new home, you will need an
owner's policy. When a claim does occur, it can be
financially devastating to an owner who is uninsured. If
you buy an owner's policy, it is usually much less
expensive if you buy it at the same time and with the
same insurer as the lender's policy.
Choice of Title Insurer.
Under RESPA, the seller may not require you, as a
condition of the sale, to purchase title insurance from
any particular title company. Generally, your lender
will require title insurance from a company that is
acceptable to it. In most cases you can shop for and
choose a company that meets the lender’s standards.
Review Initial Title Report.
In many areas, a few days or weeks before the settlement
or closing of the escrow, the title insurance company
will issue a "Commitment to Insure" or
preliminary report or "binder" containing a
summary of any defects in title which have been
identified by the title search, as well as any
exceptions from the title insurance policy’s coverage.
The commitment is usually sent to the lender for use
until the title insurance policy is issued at or after
the settlement. You can arrange to have a copy sent to
you (or to your attorney) so that you can object if
there are matters affecting the title which you did not
agree to accept when you signed the agreement of sale.
Coverage & Cost Savings.
To save money on title insurance, compare rates among
various title insurance companies. Ask what services and
limitations on coverage are provided under each policy
so that you can decide whether coverage purchased at a
higher rate may be better for your needs. However, in
many states, title insurance premium rates are
established by the state and may not be negotiable. If
you are buying a home which has changed hands within the
last several years, ask your title company about a
"reissue rate," which would be cheaper. If you
are buying a newly constructed home, make certain your
title insurance covers claims by contractors. These
claims are known as "mechanics’ liens" in
some parts of the country.
Survey. Lenders or title
insurance companies often require a survey to mark the
boundaries of the property. A survey is a drawing of the
property showing the perimeter boundaries and marking
the location of the house and other improvements. You
may be able to avoid the cost of a complete survey if
you can locate the person who previously surveyed the
property and request an update. Check with your lender
or title insurance company on whether an updated survey
is acceptable.
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