I get this question a lot in my profession. There are
2 types of title insurance. One is the bank title insurance which you are
required to get when you close your loan. This protects the bank should
any issue arrive in the future with the possession, ownership, or sale of the
property. You will see this title insurance on your GFE (Good Faith
Estimate) from your bank. However, the title insurance that is not
required to be on your GFE from your bank is the owner’s title insurance.
The reason is because it is completely separate from the bank and is offered by
the closing attorney. The owner’s policy is a one time charge at the time
of the closing and is usually a percentage of the purchase price.
Depending on you purchase price I've seen ranges of $600-$1,200 for the policy
at the time of the closing. If you decide to add owner’s title insurance
after the closing in the future usually the costs are double. So with all
that said, do you really need it? Absolutely 100% YES! The owner’s policy
protects the owner should a cloud be found in their title at any time during
their ownership or if they are trying to sell the property. It is
possible that that closing attorney missed something at the time of your
closing, now when selling something comes up. For example an old mortgage
from 20 yrs ago was never discharged properly, or someone forged signatures in
a sale 2 or 3 owners ago and someone is making a claim that your house is
theirs. These things can happen and if you don't have the owners title
insurance you will have to pay out of pocket to defend your home and
title. This can be costly when paying an attorney hourly. The only exception
would be if you were an investor and you were buying a house to flip and were
not going to have it very long and never intended to live there. But if
you are going to call the place home you better protect yourself and buy the
owner's title insurance policy!
*Consult your attorney for further details.