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Why Do You Need Title Insurance?

posted by Stephen Katz @ 10:37 AM
Thursday, June 15, 2017

Today, we’ll talk about what title insurance is and exactly what you’re paying for.

Whenever I sit down with a borrower, they ask what fees they can expect when they’re getting ready to close. One of those components is title insurance, which can be kind of pricey, but is very important. The important thing to remember is that title insurance is a one-time fee that is paid for at the time of closing. Typically, this is mandatory, so that we know that the property is going to be free and clear of any liens or clouds on title.

After hearing that, you may think to yourself “I don’t need that, it’s just an extra cost.” You might think that your home is free of any lien or clouds on title, but your builder or neighbor may have liens on your property. For example, if you buy a house where a contractor did some work for a previous owner but it wasn’t paid, it could affect your ability to refinance down the road if there are liens against the property.

Another thing you need to be aware of is the TILA-RESPA Integrated Disclosure (TRIP). TRIP was established because of the Dodd-Frank Act of 2010, which was a response to the mortgage crash. The Dodd-Frank Act aimed at making sure buyers are aware of what they’re getting into and understand their financial obligations. This change affects all of us, but the worst of it is going to land on the lending side of things.

The thing that will affect you, the buyer, the most is once you get the closing disclosure, or settlement statement, which replaces the HUD-1 statement. If we, the lender, send the disclosure through the mail, you assume three business days for delivery and then three days for review prior to closing. For example, assuming you receive the settlement statement on Friday, it will be Wednesday before you can close. This means there will be no more last second closings, as the process has now been drawn out a bit.

Do you have more questions that we didn’t answer here? Feel free to reach out! We’re happy to help.

Stephen Katz

(770) 309-0939 (direct) or (866) 742-8400 -- For the past 18 years, Stephen Katz has built a successful business almost entirely on referrals. As your mortgage consultant throughout the home loan process, Stephen will explain the pros and cons of all available mortgage programs and help you choose the financing option that is best suited to your needs. Throughout the loan process, he will keep you informed and will respond quickly to your requests with answers and solutions. Consistently a top producer, Stephen is a Mortgage Bankers Association "Diamond" Award winner, a Georgia Mortgage "Top Gun" and has closed almost half a billion dollars in loans. Put his knowledge and experience to work for you!

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