What is it? Do I need to pay for it?
Wikipedia’s definition is: “Title insurance is a form of indemnity insurance, which insures against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage loans”.
So, why do you need this title insurance, which is a onetime cost at the time of closing and based on the value of the property? Closing, refers to the event where the property is being transferred from seller to buyer, which is also called “escrow” or “settlement” in some States.
The answer is: YES! And it is best described why you need it, sharing my own experience:
My investor client closed on a property in Maryland on a Tuesday after having walk through at the property. The property needed work and my client went back to the property on Thursday with his construction company to start working. When they arrived, what a surprise: the house was wrapped like an Easter Egg with crime scene yellow tape and a sign: ”do not enter by court order – do not trespass” My client called me and we found out that the court had attached the house to a law suit for punitive damages. Apparently the dog of the former owner had bitten a person, who sued him in court for damages. The judge attached the house to the law suit for punitive damages on Wednesday!
The importance of having a title insurance was imminent. My client hired an attorney who notified the court of the closing, which luckily happened prior of the judge’s order. The damages for my client were small, mainly attorney fees – but paid by his title insurance.
Other examples for claims could be:
· A person in bankruptcy signs the deed to convey the property without authority to do so
· A family member is forging the signature and conveys the property to a third party
· A deed is incorrectly recorded with wrong legal description
· A mechanic lien was placed against the property, which was not found at time of title search
These things do happen!
If you finance the purchase of the property with a mortgage from a lender or refinance your loan, you have to obtain a title insurance to protect the lender. You do not have a choice. In some areas (like Palm Beach County) it is customary that the seller pays for the lender’s title insurance premium.
But to insure yourself - the buyer, this insurance is optional. Owner’s title insurance is complex and you should read the policy to understand any exclusions. Ask the title agent to explain the coverage to you.
How much is the title insurance? In the State of Florida the insurance and indorsement rates are promulgated by the Florida Insurance Commissioner. To give you an example: For a sale of property valued with $200,000 the insurance premium is: $1,075 (indorsement fees may be added).
Since you are required to pay for the lenders policy, you can ask for a simultaneous issue rate, which will make your owner’s policy relatively inexpensive. In the above example the additional fee would be $25. Also if the owner has a policy which was issued less than three years prior, you can request a re-issue rate – which is a reduced premium for up to 40%. If you are paying cash the owner’s policy would be the full amount of $1,075. The insurance covers you as long as you (or your heirs) own the property.
Having a Title Insurance gives you the peace in mind as we live in a litigious society.
RENT VS. BUY
For some people, buying their home makes the most sense, and for others, renting is best. The decision to own versus rent is very much a lifestyle decision as it is an economic decision and is among the biggest financial decisions that many adults make. Determining how much money you can dedicate to the purchase is an important aspect of buying your new home.
Here some questions you need to ask yourself:
To determine whether to buy you first h to find out whether you can afford to buy! You also need to consider other factors, including the time you'll stay in your new home, the home's prospects for appreciation and the taxes, insurance and condo/HOA fees.
Buying a home is costing money (closing cost). If you believe you're going to be in a house less than three years, most experts suggest it's safer to stick with renting, unless you could afford to keep the house as an investment, as it takes about 2- 3 years to recover the cost of buying home.
Reasons to rent:
Reasons to buy
If you would like to see what is good for you: Realtor.com, Zillow.com, besides other websites offer calculators where you can find out for yourself, based on your personal information.
Eligible first time homebuyers could be awarded up to $15,0000 for a down payment from the Hardest Hit Fund if a new strategy is approved by the U.S. Department of Treasury. As the deadline approaches to spend hundreds of millions of dollars the Florida Housing Finance Corp, which oversees the state’s Hardest Hit program, is looking to adapt its strategy to offer down payment assistance to first time homebuyers.
If approved it would award eligible homebuyers up to $15,000 for a down payment and Florida would be the first state to use the federal funds to help people buy homes.
With rent prices on the rise in South Florida this could be a great opportunity for someone who is ready to buy a home but may not have enough cash for a down payment. Also with the FHA program now making PMI for the life of the loan this could, depending on their price of the home, help a first time homebuyer avoid that hefty payment.
Terms of proposed down payment plan
For more information click here.
Coral Trace gracious lifestyle is superbly located just and minutes from the heart of Delray Beach, one of Florida’s most vibrant popular downtown areas.
Discover the hidden value in every Coral Trace Villa:Concrete block, Spanish style concrete roof tiles, Hurricane shutter, spacious one car garages, double driveway, private and gated community, professionally landscaped, convenient location close to I-95 with easy access to Florida’s Turnpike, or catch the free Trolly on Congress Ave and West Atlantic Ave for a free drive downtown!
282 Villas are sharing the beautiful lakeside clubhouse, with game room, well equipped exercise room, card room, and enormous social room, ideal for meetings and parties.
As a resident you can enjoy playing tennis on two lighted private tennis court, swim in the sparkling pool and enjoy the sundeck and outdoor spa.
The community offers three different models:
The Coquina: 2 Bedrooms and 2 Bath with 1401 sq ft living,
The Periwinkle: 3 Bedroom and 2 Bath with 1559 sq ft living, and
The Angel Wing: 3 Bedroom, 2 Bath and ½ Bath with 1615 sq ft living.
For more information go to www.coraltracehoa.com