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What is title insurance? Home buyer FAQ

Buyer Under Contract FAQ

What do i need to bring to settelment day when buying a home
Are you wondering what you need to bring to the closing table when you purchase your home? Let's talk!

All right. One thing a lot of our buyers run into, they're like, "Okay, so this is what a title company does, but title insurance, is that the same as homeowners insurance, or what is that? I've never heard of it?"

So title insurance, essentially, protects a buyer's possession in the property, the physical possession, and the financial possession.

There's two types of title insurance. There's lenders' policies and owners' policies. Lenders require buyers purchase a lender's title policy on the lenders' behalf, and it's 100% required. Every lender is going to require that a buyer purchase the policy up to the loan amount. It protects the lenders against any liens that weren't found in our title search.

It's important to note that the lender's policy does not protect the owners at all. The owner's policy, although optional, is purchased in more than 99% of transactions. Generally speaking, it's about 0.5%, so half of a percent of the purchase price. It's a one-time premium. It's paid the day of settlement and owned for the lifetime of the home, and it protects the owners against any liens or interest that wasn't found in the title search for whatever reason.

Most everyone in this community, your realtors, lenders, title companies are already factoring this owner's policy of title insurance into your closing costs. Because again, it's purchased in more than 99% of transactions.

And that's true, guys. I know when we meet with all our buyers, when we're factoring our closing costs and the total cost for you to get into the property, as well as all the lenders that we work with, we're assuming that you're going to get the owner's title insurance. So I don't want you to think of this as extra money, and this is not an ongoing thing. We just wanted to take a moment to explain this is why you want it. And even though, technically, it's optional, this is where you get those protections.


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