The price that you offer for your new home is not the only cost you pay. When you look at the settlement statement before signing your closing paperwork, you will notice that the amount due at closing is thousands of dollars more than the price you offered to pay for your home.
Those costs come from the due diligence and legal requirements of a real estate transaction. You have to pay for the professionals who are present when you sign the documents. You have to pay for the inspection and the appraisal of the property.
You will also likely notice that there are two title insurance policies, Each of which costs thousands of dollars. Why do you have to pay for two different title insurance premiums?
Both you and your lender need coverage
Title insurance protects you against a claim that would end your ownership of the property. If someone else has a valid right to the place you call home, title insurance protects your investment.
As the person buying real estate, you need to pay for your own policy and the policy that insures your mortgage lender. Although you can potentially waive your own policy, you have no choice about the lender’s coverage.
The lender’s policy will reimburse them for the remaining principal balance of the mortgage if you lose the property. Your title policy will help pay for an attorney to protect your title rights and reimburse you for your investments in the property if you lose your court case.
Paying for both title policies will help maximize your protection during a residential real estate transaction.