How to shop for title insurance
Carly Whitten, an attorney in New York (who is, incidentally, played by Cameron Diaz) is swooning over her new beau, the successful and charming Mark King (Nikolaj Coster-Waldau). Hoping to spend more time with Mark, Carly is bummed to learn he has to cancel because of an unexpected plumbing problem at his Connecticut home. Not one to be discouraged by a little backed-up sewage, Carly drives out to surprise him. What she finds instead is Mark’s wife Kate (the incomparable Leslie Mann), a woman she had no idea existed. Carly thought Mark was hers, only to learn otherwise. And how must Kate feel? What a quagmire, indeed!
Now let’s extend this scenario for a moment away from people and instead towards real estate. Imagine you’re Kate (and wouldn’t we all like to be Leslie Mann!), and Mark isn’t your husband, but your house. What would you do if you learned that other people had competing interests and claims on your home? This is exactly where title insurance comes in handy.
What is Title Insurance?
If you’re planning to purchase or finance a property, you’ll be required to obtain title insurance in order to ensure you have full legal ownership of the property. So if you’re going to need to get title insurance, you should at least understand what you're paying for and why!
Essentially, title insurance protects both the lender and the homeowner from damages in the case that someone claims to have partial ownership of the property after you’ve already purchased it.
So how does it work? When you get title insurance, a title agency will cross-check your lender’s title insurance to see if there are any open claims against the property you are purchasing. The title search usually goes back a minimum of three decades and involves a thorough scrutiny of public records.
The longer someone has lived in the property, the easier it will be to determine who legally owns the property. (And that’s why title insurance could be cheaper on a new development, since there isn’t much work for the title company to do).
In case an issue appears before closing the property deal, the seller or their title insurance company will pay for it. But it’s always possible that something comes up after you’ve purchased the property — and if someone came riding in after closing, claiming to have rights to your home, you’d be in a financially risky situation. In that scenario, you’d turn to your title insurance for financial protection.
Do You Need Title Insurance?
The long and short of it is: yes, yes you do need title insurance. Title insurance exists to financially protect you in the event that someone claims to have ownership of your home after you close the sales deed. That way, you’re protected from damages after you’ve made a huge investment. (After all, you don’t want your new home to cost even more than the purchase price!)
With title insurance, you’ll be able to find out if there are any underlying issues (or long-lost relatives) when it comes to your property. These policies verify that the current owner has the right to sell the property and that there are no claims, liens, or other financial encumbrances that could affect your rights as the future owner. And if issues do arise with the deed and someone makes a claim to the property, your policy would cover any payment (and related legal fees) that are needed.
Keep in mind that although the buyer purchases title insurance, this coverage actually protects the lender, too. If any claim or issue pops up with the deed, the bank’s financial interest remains protected under all circumstances. And that’s why your lender will require title insurance before issuing or refinancing a mortgage.
How To Shop For Title Insurance
Your realtor or your lender will often recommend a title insurance provider, but it’s your right to choose the company you want to work with. In fact, Real Estate Settlement Procedures Act (RESPA) ensures that a borrower cannot be forced or required to use any particular title insurance provider when getting a home loan or closing a property purchase deal.
There are a few factors that go into the cost of title insurance, so you’ll want to look at all of these when shopping around. Title insurance can include policy endorsement fees, settlement service fees, document preparation, and notary fees, among others.
The fee for title insurance may also include the title company handling the settlement process to ensure all parties involved in the deal have received all necessary payments. In addition, the rate you pay for title insurance could fluctuate depending on whether the mortgage lender offers any discounts.
1. Look into your state's rules
Fun (sorta) fact: The services included in title insurance vary by state. So whether you decide to shop around for title insurance will also be influenced by the state you live in. For instance, title insurance rates are set in following states:
- New Mexico
- New York
- New Jersey
If you live in Florida, Texas, or New Mexico, there’s no variation in title insurance costs between companies. But if you call New York, New Jersey, Pennsylvania, Delaware, or Ohio home, fees for services such as title search and investigation may be different depending on the company (though rates will still be the same). In other states, escrow companies handle some of these responsibilities. You can always visit the American Land Title Association to learn more about title insurance where you live.
2. Speak with your real estate agent
If all of this sounds a little confusing, the first place to start is to ask your real estate agent for their preferred title insurance company. You can use this recommendation as a starting point and can then compare its rates and coverage options to that of other providers. And who knows, maybe you’ll like the policy so much you won’t feel like continuing your search!
3. Browse coverage plans
If you’re not immediately taken by your realtor’s title insurance company, we suggest shopping around. (And even if you are, it never hurts to look.) Some lenders may offer discounts, for example, or you may be eligible for loyalty rewards if you use your current bank or credit partner.
Using an insurance comparison calculator can also help you compare the best policy for your needs and budget.
4. Speak with an insurance agent
As with shopping for any type of insurance policy, you’ll want to keep the following in mind:
- Get quotes from multiple companies
- Inquire about additional coverage options, depending on your needs
- Look into open claim rates
And that’s where a title insurance agent could come in handy! An insurance agent can help answer your questions and understand if you have the right coverage for your needs. They’ll make sure you’re as protected as possible and that the companies you’re looking at have a proven record of success.
Browse Title Insurance Plans with Marble
Remember Carly and Kate, from before? Well, they ultimately join forces against Mark — but that’s probably not going to be the case for you and someone claiming to be a long-lost owner of your home.
But don’t stress! Marble is here to help make sure you’re protected in case of any untoward advances. Compare different types of insurance quickly and easily using our online tools. And once you find a plan that works for you, you can add it to your Marble wallet, along with all your other insurance policies — and earn rewards while you’re at it. Sign up today!