Obtaining title insurance is a universal requirement for almost every mortgage and remortgage. While the expense is usually minimal compared to the overall expense of the property itself, it is important to understand what title insurance is and how a savvy buyer can decrease the cost in some instances.
Title insurance is an insurance policy issued at the time of a property transfer that is designed to protect the bank from incurring financial harm in the event that the title search was improperly performed. If, at some later date, a claim is made against the property in the form of a lien or judgment, the title insurance will cover the financial damage done to the lender. The cost of an insurance policy is paid in one lump sum and is based upon the purchase price of the property being insured. It is generally the responsibility of the buyer to pay for the policy.
It is not unheard of, however, for the buyer to request that either all or part of the cost of the title insurance be paid by the seller as part of the negotiation process prior to agreeing to a sale price for the house. In a buyer’s market like this, sellers are highly motivated to lubricate a sale with whatever means are necessary and the relatively small cost of the title insurance is often seen as an acceptable sacrifice to close the deal. If the house was previously sold within just the past year or two, it is also possible to inquire with the insurance company that issued the previous policy about the possibility of obtaining a re-issue rate on the new policy. A re-issue rate can be significantly lower than a new policy due to the fact that the property transferred without trouble in the recent past, making the likelihood of a title problem less of a risk.
If you do need to purchase a new policy, there is no reason not to shop around for the best price. The mortgage company has the right to require that you choose an insurer acceptable to them, but if you are the one paying for the policy, you have every right to find one on your own that you can both agree on.
