Clarkston MI Home Purchase- Why are the Seller and I Both Paying for Title Work/Insurance?
When you get your closing statement you will probably notice charges to both you and the seller for title. A very over simplified way I've explained this in the past is that the seller is paying to supply clean title to the house and you are paying to supply clean title for the mortgage company. For example- if you have an IRS lien it can attach to your house and would have first position in front of the bank.
This morning I went to the web site for the title company I prefer my clients use- First American Title - www.FirstAm.com. They have a much more detailed explanation than the one I'm going to offer here.
There are two types of title insurance when there is a purchase with a mortgage. The company you're borrowing the money from for your mortgage (whether that is a bank, credit union, etc) will require what is called a Loan Policy which protects their interest. The cost is based on the loan amount and is less than the Owner's Policy which is the part the seller typically pays for.
The Owner's Policy is usually for the amount of the sale price and protects you, the buyer, if a covered title problem comes up later. Some of the hidden title problems that would be covered can include errors or omissions in deeds, mistakes in examining records, forgery, undisclosed heirs- basically insuring your ability to be able to pass on clean title when you go to resell later.
If you purchase with cash or land contract you will not need the Loan Policy but it is still prudent to get the Owner's Policy. The few hundred to couple thousand dollar investment is well worth it even if you have a title search performed and find no problems or if you buy from a relative. The Owner's Policy provides assurance that your title insurance company will stand behind you- monetarily and with legal defense if needed- if a covered title problem arises after you buy your home.
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Jackie Hawley
Keller Williams Realty
Cell: (248) 736-6407
Jackie@JackieHawley.com
www.MiRelocation.com
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