You’ve looked over the options and have made your choice: You’re ready to purchase that cozy condo or that attractive New York brownstone. Whenever you buy residential New York real estate, you aren’t merely paying the asking price. Rather, there are many other fees associated with it including a host of various closing costs. As a purchaser, you want to save money and may want to avoid a survey or an inspection as a way to keep down expenses. While some of these costs (including broker fees) aren’t negotiable, there are things that you can sidestep.
However, many times mortgage lenders won’t allow buyers to do this. A close analysis of the financial information prior to closing indicates that you have to pay for title insurance not only for yourself but also for the mortgage lender. While there is usually no way to get out of buying a lender’s policy, you can opt out of a buyer’s policy. But is this something that you really want to do? Read on to learn more about making this choice and what’s at stake if you don’t buy a homeowner’s title policy.
Types of Policies
There are two types of title insurance policies, an owner’s policy and a loan policy. The owner’s policy protects you in case there is a covered title defect in your right of ownership. If you need a mortgage to buy your home, the lender will probably require that you purchase a loan policy or lender’s policy. This policy protects the lender’s interest in the property until the mortgage has been paid in full.
Title Insurance and Ownership Rights
In order to get a title insurance policy, you will need to have a company carry out an exhaustive title search looking at the ownership history of the property, including any liens that require payment as part of the transaction. When you acquire a title insurance policy, it will protect you if another party eventually shows up claiming to be an owner or claiming to have the right to some other hold on the property’s title.
First, the title insurance will pay for a lawyer to represent you in a title dispute in court. Next, if the person claiming title is successful and you lose possession of the property, then the title insurance will reimburse you for the investments that you’ve made in the property.
However, if you don’t have a title policy and someone brings a claim against your property, you could lose out on not only the down payment that you made, but also on all of the accrued equity from payments since the closing, and the value of improvements that you’ve made to your home.
Get Answers from an Experienced New York Real Estate Attorney
Buying a new home is one of the most fulfilling things that you can do. Ensuring that your right to own the property is secure can be equally satisfying. Understanding the aspects of a real estate transaction can assist you with making thoughtful choices prior to your closing. Get help with this by turning to one of our experienced MOWK Law attorneys who can guide you through this process. Contact us today for more information.