First-time home buyers often fail to understand how expensive the process can be. They don’t just need to come up with the amount offered for the purchase of the home. They will also need to cover thousands of dollars and closing costs.
Although sellers do sometimes contribute toward closing costs, closing costs are frequently left for buyers to cover. There will be inspection fees and signing costs, in addition to title insurance premiums due at the closing table.
Some people believe that a second title insurance premium on their settlement statement is a mistake, but there are usually two policies in play. Why do you need to pay for title insurance twice?
Both you and the lender require protection
Title insurance is a kind of coverage that you would very rarely need, but it is crucial in the unusual situation where there is an issue with your property’s title records. Title insurance protects you from the loss of your downpayment and the equity that you have in your home if someone else brings a claim against the property’s title.
The lender’s policy protects the amount that they financed so that they don’t lose money if you lose the home. Although you may be able to cancel your own title coverage, you will not be able to cancel the policy that protects the lender. Without a buyer’s policy, you could lose everything you invested in the property if someone brings a claim against it later.
Paying both of those policy prices is a small cost for the protection and peace of mind you have knowing that your ownership rights have protection. Understanding the costs you have to cover when buying real estate will help you prepare for your residential closing confidently.