Title/Escrow

The Cost of Title Insurance You may know how traditional insurance models work, but the title insurance process differs greatly from property and casualty insurance, like health or auto. This is because: Title insurance helps eliminate past risk, rather than assessing the probability of future risk Title insurance claims are less common than other types of insurance claims, due to the fact that risk mitigation is performed as part of the title insurance process Title insurance providers search public records and court documents to assess and remove (if possible) any “clouds” or title issues on a property. A large portion of your policy’s cost (90 percent according to the American Land Title Association) actually goes toward the search and examination process. An owner’s title insurance policy is a one-time purchase, and remains active as long as you hold interest in the property. In most states, the cost of an owner’s policy is based on the home’s price, while a lender’s policy is based on the amount of the loan. Get more information by calling a First American Title office in your area, or use First American’s Title Fee Calculator, located at firstam.com. What is Title Insurance? So what exactly is "title insurance"? Well, when a property is financed, bought or sold, a record of that transaction is generally filed in public archives. Likewise, records of other events that may affect the ownership of a property, like liens or levies, are also archived. When you buy title insurance for your property, a title company searches these records to find - and remedy, if possible - several types of ownership issues. First, the title company searches public records to determine the property's ownership status. After this search, the underwriter will determine the insurability of the title. Even the most skilled title professionals may not find all problems associated with a property, though. Some risks, such as title issues due to filing errors, forgeries, or undisclosed heirs, are difficult to identify. So after the title company finishes its searching, it also provides insurance title policy that will help protect you from a variety of issues that might be uncovered later. If you take out a mortgage loan when you buy your property, your lender will require a loan policy of title insurance. This protects the lender's interest in your property until your loan is paid off or refinanced. On the other hand, an owner's policy of title insurance insures your ownership rights to the property. Even though you'll pay for this policy only once, your coverage will last as long as you own your home. A real estate purchase may be the largest financial investment you ever make. So, when you buy an owner's policy of title insurance, just think of it as buying some peace of mind! The Title Search Process If you’ve ever purchased a home, you have likely also purchased title insurance. But do you know what it really takes to properly insure the title to your property? A few things you may not know about the process: A title order begins with an in-depth search starting with a review of public records. The search can be complex because, depending on your geographic location, property information may be filed any number of ways. Title companies, like First American, have created systematic search methods and large information databases that lead to faster and more accurate research. Title searches uncover possible title issues, like liens, judgments and information on prior loans, sewer assessments taxes and other issues. Newly constructed properties still require a thorough search, as the land has likely changed hands many times, and there is no guarantee that subcontractors or suppliers have not placed liens on the property. The data collected from a title search helps reduce the risk of future title problems with your home and makes your title policy—and the process of underwriting it—a valuable investment.