Title insurance is often a slightly neglected procedure that isn't the first thing that home buyers consider.
It is, however, an important factor to conduct before any property transaction, whether you are purchasing or refinancing a property.
How does title insurance work?
First of all, there must be a search conducted by an attorney to make sure that the property being purchased is not held under anyone else's name and find out whether there are any heirs to the property that have not been disclosed. Once it has been established that the title is free for purchase, the case will be assessed by an underwriting company, that will assess the terms of the insurance that will defend you if anyone does try to claim the title.
Things to consider before taking out title insurance
Consider whether there are regulated prices: Most states have regulatory prices for title insurance, so it is unlikely that there will be big differences between insurance companies. However, you should make sure to shop around.
As a general rule, you should take the advice of your mortgage lender above your real estate agent. This is because it is in your lender's best interests that you take out all of the necessary insurance and protect yourself at all costs.
You can negotiate with your lender on who will pay for each part of the title insurance. In order to weigh up whether it is worthwhile to do this, consider how much you are paying for the title insurance as a percentage of the total amount of the purchase of your home.
Source: Bank Rate, "6 questions to ask about title insurance," accessed Nov. 14, 2017