| Premier Title Company, Inc. |
| (340) 776-0777 (340) 776-8664 fax |
Do I really need title insurance?
If you have recently purchased or refinanced a home, chances are you have had
to buy title insurance. What exactly does title insurance cover, and who does it
protect - the homeowner or the lender? Do you need title insurance on a
refinance if you bought title insurance when you purchased your home, or
refinanced six months ago? Here are answers to those important questions, as
well as helpful advice on title insurance and why you need it.
Title Insurance seems like just one more expense I have to pay when I
buy or refinance a home. What exactly does it cover?
Title insurance protects against problems affecting the title to your home, possibly
your most valuable asset. There are two types of title insurance - a lender's policy,
and an owner's policy. When you obtain a loan, (and a refinance is a new loan),
the lender will require that you purchase a lender's title policy to protect their
investment in the property. Owner's title insurance is optional, but it protects the
homeowner by paying claims and legal fees should a problem arise. You usually
only purchase an owner's policy at the original sale, not on a refinance.
Having a serious problem with my title seems rather remote. Is insurance
really necessary?
Title companies find problems in 25% of their title searches. Problems such as
liens from unpaid child support, alimony, parking tickets, and taxes or from unpaid
subcontractors. Other things that can cloud title that are not so easy to detect
include forged signatures in the chain of title, recording errors, title search errors,
undisclosed easements and title claims by missing heirs and/or ex-spouses. For
this reason, title insurance is highly recommended.
I paid for a lender's title insurance policy. Does that protect me as the
homeowner?
No. A lender's policy protects the lender's interest in the property should a
problem arise. It does not cover the owner's equity in the property, and will not pay
the homeowners legal expenses if there is a problem. Only an owner's title
insurance policy will protect the homeowner.
I purchased title insurance when I bought my home a year ago and I am
now refinancing my mortgage. Why do I need to pay for title insurance
again when I know there are no problems with my title?
As mentioned previously, when you obtain a new loan, (and a refi is a new loan),
the lender will require lender's title insurance. Even if you recently purchased your
home there are some problems that could arise with the title. For instance, you
might have incurred a mechanic's lien from a contractor who claims he/she has
not been paid. Or you could have had a judgment placed on your house for
unpaid taxes. The lender wants to make sure the title to the property they are
financing is clear.
If it has been less than five years since you obtained the previous policy, ask if
you qualify for a "reissue" or refinance rate - a discount on your new lender's title
insurance. You will not need to purchase a new owner's title insurance when
refinancing. Owner's title insurance is purchased for a one-time fee at the original
purchase and lasts as long as you or your heirs have an interest in the property.
| A Division of Kevin F. D'Amour, P.C. |
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| Time Center Building 4600 Estate Charlotte Amalie St. Thomas, U.S. Virgin Islands 00802-3405 |
| Recipient of the Stewart Title 2006 "Leading Agent" Award |