Why Buy Title Insurance?
To protect YOU! It is designed to protect you against the losses that can occur after closing when it's discovered that someone else has a claim against the title of that property. A title search is a close examination of public records that involves the property you are purchasing, to ascertain that the "Chain of title" has correctly transfered to each new owner, and to insu re that no defects in title to you property exist that may cause problems for you later. Title examiners typically d that all possible liens including prior judgments, mortgages, back property tax & other potential liens are paid in full before you close the real estate transaction. However, errors or unanticipated claims can occur. Title Insurance transfers risk from YOU to the insurer and may reimburse you for any loss or devaluate your property as a result of a claim.
There are two types of title insurance, Owner's title insurance, and Lender insurance, which is also known as a Loan or Mortgage policy. The vast majority lenders require a loan policy when they furnish you with a mortgage, they recognize the importance of good title. Shouldn't you?
Owner's title insurance is most commonly issued for an amount equal to purchase price of the property. The policy lasts as long as you or your heirs have interest in the property, and c an be purchased for a one-time fee at Owner's title insurance protects the buyer should a problem arise with the title that was not discovered prior to the closing of your purchase. The policy also pays for any legal fees incurred in defending a claim to your title. Loan policies are usually based upon the amount of your loan and insures that your lender will not have a title claim that interferes with its mortgage.
CLOUD ON THE TITLE
If a problem, otherwise known as a "defect" or "cloud" on the title it should be corrected before closing. Rights others may hold can includes, but are not limited to: outstanding mortgages, judgment liens, construction liens, rights of way, easements, mineral rights, utility easements, possessory right (right to occupy), and pending legal actions.
Title insurance is there to protect you from the ever present potential for human error that could result in such a cloud interfering with you ownership of the property. Even expert title examiners can overlook a defect that can cast a cloud over your title. Title insurance does not cover defects that arise after you of the property, and depending on the type of policy, there may be exclusions certain type of title defect such as navigational right, mineral rights easements, and encroachments.
Considering all that it protects, title insurance is relatively inexpensive. It is one of the best investment s you can make for your new home.
What does PMI cost?
A Good Faith Estimate will be provided to you within a few days after we received your loan application. This disclosure will provide you with an estimate of your monthly PMI premium as well as the initial premium you'll need to pay at closing.
New PMI Requirements
A new federal law, The Homeowner's Protection Act (HPA) of 1998, requires lenders or servicers to provide certain disclosures concerning PMI for loans secured by the consumer's primary residence obtained on or after July 29, 1999. The HPA also contains disclosure provisions for mortgage loans that closed before July 29, 1999. In addition, the HPA includes provisions for borrower-requested cancell ation and automatic termination of PMI.
Why a Change in PMI Requirements?
In the past, most lenders honored consumers' requests to drop PMI coverage if their loan balance was paid down to 80 percent of the property value and they had a good payment history. However, consumers were responsible for requesting cancellation and many consumers were not aware of this possibility. Consumers had to keep track of their loan balance to know if they had enough equity and they had to request that the lender discontinue requiring PMI coverage. In many cases, people failed to make this request even after they became eligible, and they paid unnecessary premiums ranging from $250 to $1,200 per year for several years. With the new law, both consumers and lenders share responsibility for how long PMI coverage is required.