insurance

6 questions to ask about title insurance

Or, your lender could require additional insurance on the property or mortgage. For instance, an ARM, or adjustable-rate mortgage, endorsement would guarantee that the lender is first in line for repayment if the home goes into foreclosure, says Pellegrini.

3. Who usually pays? The party responsible for paying for the two policies -- buyer's and lender's -- varies from state to state and sometimes from county to county, says Yohe. In some locales, the buyer may pay for one; the seller, the other.

That doesn't mean if the buyer pays, he can't haggle for all or part of his costs. "It can always be negotiable," Yohe says.

If you're buying the owner's and lender's policies from the same company, "in many cases, there's a substantial discount," says Lucero.

4. Is the seller pushing a specific title company? If you pay for the title insurance, you have the right to select the company. If you're not paying but want to choose the company, be prepared to share some of the costs, says Mann.

Be wary if the seller is pushing his title company, he says. A title search is meant to find errors before you buy. Use the same company that your seller did years earlier and odds are you'll get the same results, Mann says. Often, searchers aren't using actual records but summaries or extracts of those records. A fresh set of eyes (and extracts) could unearth problems, allowing you to fix them before you buy, he says.

5. Who do I trust? If you're getting advice from your seller, your real estate agent and your mortgage lender, look to the lender, Mann says.

"The lender's interest dovetails with yours in getting these things done well," Mann says.

The lender is guaranteeing a large amount of money based on the assurance that the property you're using as collateral is really yours.

6. How much reassurance do I need? Banks and insurance companies aren't supposed to go under, but they do. If you want to verify that the underwriter issuing the insurance policy is currently sound, check its financial solvency with ratings companies like Fitch Ratings, Demotech Inc. or A.M. Best Co.

You can also research the underwriter and title company or attorney online to see what past customers are saying about their services.

Every business has its bad apples. In very rare instances, a title insurance agent has issued policies but pocketed the premiums instead of forwarding them to the underwriter, so consumers weren't covered, says Joseph W. Eaton, co-author of "The American Title Insurance Industry."

One easy solution: Contact your underwriter directly and ask for a copy of your policy, he says.

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