Why Is Title Insurance Important?

With interest rates at an all time low, many homeowners are opting to refinance their mortgage in order to lower their monthly mortgage payments. However, when refinancing, homeowners must be prepared to pay closing costs similar to the ones paid when buying their home initially.

Why do you have to pay those costs again? Because as far as the lender is concerned, you are essentially buying your home over again — the lender has the same amount of work to process on their end as if you are buying a new home. In addition to points, application fees, appraisal fees, survey costs, homeowner’s hazard insurance, credit check, and other fees, you will also have an additional purchase of title insurance.

Why Title Insurance Is Important?

Title insurance is an important part of refinancing because it essentially protects the homeowner of their ownership. Title insurance safeguards the homeowner from loss due to problems with the title. Your policy states that your title company will provide legal counsel should any problem with your title occur. The title insurance company offers a complete and thorough background investigation on your property searching for anything that could affect the title, such as: tax information, historic matters of importance, purchasing information, other claims to the property, etc. — essentially all matters which could affect ownership.

However, even in the most thorough investigations, it is possible to miss something important, and therefore, you buy title insurance. This protects the homeowner as well as the title company. Once the settlement is final, the homeowner is completely responsible for any valid claims made against the property in question. Title insurance protects your investment.

Why do you need a new title insurance policy when refinancing when they already have an existing policy on the same house? The answer is simple: the old policy does not protect against something that might have happened between the time you purchased the property and when it is refinanced.
Another reason why buying a new title policy is so important is because many mortgages are set up as securities and sold to investors in the secondary mortgage market. Having title insurance ensures that the mortgages backing these securities are legitimate.

How Much Does Title Insurance Cost?
Title insurance is relatively inexpensive. The cost of title insurance is based on the purchase price of the home and the loan amount. Although charges can vary by state, title insurance (including the title search, examination, and other services) amounts to about one percent, or less, of the cost of the property. The higher the value of the property, the more coverage is needed. The premium is paid just once, at settlement, for immediate protection (as well as protection in the future even after the property is sold) as long as the property is owned by the insured.

Why choose Our Maryland Title Company ?
Experienced leadership, dedication to our customers, and a strict, thorough, and efficient work ethic, has made Patriot Title a successful leader in the title industry. Our experienced and qualified staff will work diligently in order to assist you in fulfilling all of your title policy and insurance needs. For more information about title policies and title insurance call our offices toll free at, 888-602-1181. Click here to request a quote.