Attorney Directed Real Estate Closings
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What is Title Insurance?
Watch this 6 minute video to get a basic understanding of what it is, why your lender requires it, and why you should purchase your own policy!
Basically, its an insurance policy issued at closing that protects your lender (and you if you choose to purchase a policy) from "hidden risks" that may effect your ownership and use of the property you are purchasing. Risks like fraud, forgery, and incompetency in the chain of title.
Pike Title issues title insurance policies from Old Republic National Title - one of the oldest and largest title insurance underwriters. Lenders require buyers purchase a policy on the lender's behalf, and buyers may choose to purchase their own policy.
What are the types of policies to choose from?
The Lender policy is issued for the amount of the mortgage and only insures the lender, even though the borrower is required to pay for it. There are several kinds of Owner policies that the buyer may choose to purchase as well. Unlike other types of insurance, title insurance premiums are only paid once and may cost less than your monthly auto insurance bill.
BASIC HOMEOWNER'S POLICY
This policy protects the buyer from covered risks that may effect your ownership interest in your home. These are things like heirs of a previous owner claiming ownership rights, parties to a lease, a defective title, etc. Pike Title thoroughly searches for these kinds of issues before closing, but sometimes there is simply no way to know about them until after your home purchase is complete.
A BUYER SAVES MONEY PURCHASING A POLICY AT CLOSING
A buyer may purchase an Owner's title insurance policy at any time. But, when she chooses to purchase an Owner's policy at the time of closing, she only pays the difference between the cost of the lender's policy and the owner's policy. So, if the lender's policy cost is $500 and the Owner's policy costs is $1000, the buyer only pays $500 for an Owner's policy at closing. If the buyer purchased an owner's policy at a later time, she would likely pay the full $1000 policy cost.
ENHANCED HOMEOWNER'S POLICY
The enhanced policy includes the same covered risks as the Basic Homeowner's Policy and includes protection from zoning and permit violations.
Consider this example: a previous owner built a DIY addition to your home. After you purchased the home, an inspector tells you that your addition was built without a permit and does not comply with local building code and must be updated or removed. Enhanced coverage protects you, while basic coverage does not.