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Title insurance is usually
required by the Indianapolis Indiana lender to protect the lender against loss
resulting from claims by others against your new home. In some states,
attorneys offer title insurance as part of their services in examining
title and providing a title opinion. The attorney's fee may include the
title insurance premium. In other states, a title insurance company or
title agent directly provides the title insurance.
Owner's Policy. A Indianapolis Indiana
lender's title insurance policy does not protect you. Similarly, the prior
owner's policy does not protect you. If you want to protect yourself from
claims by others against your new home, you will need an owner's policy.
When a claim does occur, it can be financially devastating to an owner who
is uninsured. If you buy an owner's policy, it is usually much less
expensive if you buy it at the same time and with the same insurer as the
lender's policy.
Choice of Title Insurer. Under
RESPA, the seller may not require you, as a condition of the sale, to
purchase title insurance from any particular title company. Generally,
your lender will require title insurance from a company that is acceptable
to it. In most cases you can shop for and choose a company that meets the
lender’s standards.
Review Initial Title Report.
In many areas, a few days or weeks before the settlement or closing of the
escrow, the title insurance company will issue a "Commitment to
Insure" or preliminary report or "binder" containing a
summary of any defects in title which have been identified by the title
search, as well as any exceptions from the title insurance policy's
coverage. The commitment is usually sent to the lender for use until the
title insurance policy is issued at or after the settlement. You can
arrange to have a copy sent to you (or to your attorney) so that you can
object if there are matters affecting the title which you did not agree to
accept when you signed the agreement of sale.
Coverage & Cost Savings. To save money on title insurance,
compare rates among various title insurance companies. Ask what services
and limitations on coverage are provided under each policy so that you can
decide whether coverage purchased at a higher rate may be better for your
needs. However, in many states, title insurance premium rates are
established by the state and may not be negotiable. If you are buying a
home which has changed hands within the last several years, ask your title
company about a "reissue rate," which would be cheaper. If you
are buying a newly constructed home, make certain your title insurance
covers claims by contractors. These claims are known as "mechanics'
liens" in some parts of the country.
Survey. Lenders or title insurance companies often require a survey
to mark the boundaries of the property. A survey is a drawing of the
property showing the perimeter boundaries and marking the location of the
house and other improvements. You may be able to avoid the cost of a
complete survey if you can locate the person who previously surveyed the
property and request an update. Check with your Indianapolis Indiana lender or
title insurance company on whether an updated survey is acceptable.
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