What You Need To Know About Title Insurance When Buying A Home In The Charlotte Region
When you're buying a home in North Carolina one of the most important decisions you need to make is about purchasing title insurance. If you are financing your home, your lender will require title insurance to cover the amount of the mortgage. Home buyers often confuse title insurance with home owner's insurance. However, title insurance and home insurance are two totally different things (and clearly you will need both). One big difference is that you pay an annual premium for your homeowner's insurance, while there are no recurring premiums for title insurance. It's a one time payment at closing and your home is covered for the duration of your ownership.
What Is Title Insurance?
Title insurance policies insure the condition of the title to your home and your ownership rights to that real estate. If any claims or issues arise after you purchase the home with respect to your ownership, the title insurance policy covers you for those claims. Policies include coverage for your court and attorney fees, as well as reimbursement for actual losses up to the face amount of the policy. Title insurance does not guarantee there are no title defects... it covers your losses against any that might arise after you've purchased your home.
Do You Need A Separate, Owner's Title Insurance Policy?
A mortgage lender's title insurance policy covers only losses that impact the lender's interest in your home and only the amount of the loan. So if you've put 20% down at purchase, your 20% ownership is not covered under the lender's policy. To be covered fully you need to buy your own policy.
It's worth pointing out that in North Carolina you can choose to purchase an "enhanced" title insurance policy, which provides additional coverage at a fairly nominal cost. For example, an enhanced policy would cover covenants and restrictions violations, permit violations, certain encroachments, zoning law violations, amongst other things. So be sure to ask about an enhanced policy. These are not typically offered up front and in my opinion enhanced policies are "cheap insurance." (No pun intended!)
What Will A Title Insurance Policy Cost?
The State of North Carolina sets the rates for title insurance. This means whoever the provider of the policy is, the rate for the policy should be the same. And quotes are free. Whether you select your carrier or you let your settlement attorney do so, the policy will be put in place by the attorney and you will see the premium as a closing cost line item in your settlement statement.
If you are purchasing a resale home that has already been covered by a policy, be sure to ask the seller or seller's listing agent who the carrier of their title policy is. That way you can ask for a "re-issue rate" and depending on the age of the policy, you could save several hundred dollars. (Don't assume you will get a re-issue rate automatically.) When I ask this question, home sellers typically say they have no idea who wrote the policy... but if you go back to the latest HUD-1 or Closing Disclosure on the home from when you purchased or last refinanced, the title insurance company will be listed on the closing statement.
What Else To Know About Your Title Insurance Policy:
You won't receive a copy of your policy at time of closing. The policies are typically sent to you within 30-60 days after closing. If you don't receive your policy in the mail within that time frame, call your settlement attorney to help track it down. Keep your policy in a safe place with all your other home purchase and closing documents.
FOR THE "ABC'S" OF TITLE INSURANCE, READ THE ORIGINAL ARTICLE AT GREATHOMESINCHARLOTTE.COM
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