
Title Insurance for First Time Home Buyers: The Definitive Guide
First Time Home Buyers? Title insurance is an essential tool when it comes to real estate transactions. It serves to protect mortgage lenders and buyers in case of potential financial losses.
These issues may arise from disputes or defects that have gone unsighted before the transfer of property ownership. It happens due to unforeseen issues defects that are not detected in the title search.
The buyer needs additional protection in the purchasing process, that is why purchasing title insurance is indispensable. This article is a breakthrough guide of title insurance for first time home buyers.
Why Is Title Insurance Necessary?
First Time Home Buyers? It is not uncommon that property titles reveal issues after the transaction was already closed. There are several scenarios where a standard title insurance policy will help, such as:
- Forged documents
- Fraudulent sellers
- Certain breaches missed during a title search
- Improperly filed documents
- Unknown heirs claiming the property
The title insurance policy is optional for the property owner. However, most lenders require a person who takes a mortgage to buy it before lending the value. It happens due to the protection enabled by the title insurance policy for the lender’s interests and liability.
Both the federal government and the state government of Florida regulate title agents and insurers in South Florida. Even then, some mistakes may occur along the way, which generates large financial ramifications for property owners.
What Type of Situation Does Title Insurance Cover?
This policy covers the defects which could have occurred before the transfer of the property to the buyer. It will not cover any damage or mistake that happens after the property has been transferred to the buyer’s possession.
When the buyer makes a claim, the title insurance policy serves to cover the costs and damages associated with fixing the problem. This instance is laid down by the National Association of Insurance Commissioners (NAIC).
This institution has a Center for Insurance Policy and Research. Their mission is to study issues associated with title insurance and help regulatory agencies to fight fraudulent and non-ethical activities.
In Which Cases A Title Insurance Will Not Cover The Loss?
At times, deeds or deeds of trust releases may be improperly filed, lost, or resultant of fraud. If one of these issues is revealed after purchasing a property, the title insurance policy will protect the buyer.
However, there are some cases where a title insurance policy will not cover the loss, such as:
- Environmental protection laws
- Post-policy claims
- Disputes involving boundary lines
- Zoning issues
The ideal scenario is that this type of issue is remedied during the title search process. However, if it does not happen, the financial liability of fixing the issues falls on the buyer. This instance is laid down by the Consumer Financial Protection Bureau (CFPB).
How To Identify Who Pays for the Title Insurance Policy?
This situation will vary according to the type of insurance, as there are the owner’s insurance and lender’s insurance.
Most lenders expect buyers to pay for their title insurance policy, summed up by the buyer’s policy. The buyer can disclose the estimated costs in a Closing Disclosure or Good Faith Estimate. However, these costs may change a bit depending on the final terms of the transaction.
Notably, the lender’s policy amount usually equals to the financed amount. This policy depreciates as the borrower pays the mortgage, so it ends once the mortgage is fully settled. Hence, the lender’s insurance policy is commonly lower than that of the buyer.
On the other hand, the owner’s policy lasts as long as the owner or direct heirs demonstrate an interest in the property.
How Much Does Title Insurance Cost?
It is changeable fact, depending on the state where the property is located, loan amounts, and purchasing price of the property.
According to the National Association of Realtors (NAR), the cost averages about $1000 for property owners. The regulation in Florida has fixed premium prices, regardless of the situation.
Throughout the process, some optimal services and fees may be included in the price of the title insurance premium. Still, the buyer can negotiate these fees to lower the price or even remove it.
What Safety Measures To Take When Purchasing A Property In Florida?
First time home buyers must be aware and make sure the title process is working as expected. It is vital to ensure that the deed, other applicable deeds of trust, and covenants were recorded in the land records office. In South Florida, it is possible to check it at the county’s land records or checking directly on its online database.
It is utterly important that, until the selling or transfer or the property is concluded, all documents must be kept in handy. It is essential to safely keep a copy of the title insurance policy. This is recommended for all closing statement documents as well.
Anticipation Is Essential To Avoid Issues In The Future:
Now you have the definitive guide about title insurance for first time home buyers. It will help you avoid legal breaches and errors, focusing solely on enjoying your new property.
However, the process is easier when carried out by experts. Here at Marina Title, we have a team of experienced professionals with years of experience in the title and escrow field.
First Time Homebuyer In Florida? Get Professional Guidance At Marina Title:
Do not hesitate to contact us. Our experts are ready to guide and instruct you through the purchasing and closing process, saving you time and money. Call to us to (305) 901-5628 or send us an email to Info@MarinaTitle.com and get help now.