How to Buy Title Insurance. Banks offering mortgage loans typically require home buyers to purchase title insurance. For the most part, the insurance protects banks from problems resulting from mistakes that can be made during title searches as a licensed searcher verifies who owns the home and whether there are any liens on it.
Consider that a title insurance premium is paid one time by the borrower when the mortgage is taken out.
Ask about the rate you are paying on the insurance. Rates can be as low as 0.4 percent of the mortgage total. In such a case, title insurance would cost $800 for a $200,000 loan.
Save money on the insurance by finding out whether you can get a title policy already on the house you're buying reissued to you. This can create a cost savings because if the request is granted, it can lead to a title search that's less involved.
Examine a policy you intend to buy on your own to make sure you aren't left with less protection than you want. If you discover exceptions in the policy that you don't want, ask the title insurer if they can be removed.
Take into account that even though title insurance protects banks from mistakes that can be made in a title search, it also offers home buyers some protection as well. Without the insurance, a home buyer would have no protection from unexpected title problems. Title insurance claims can include the cost of back property taxes missed during a title search before a home sale.