Shopping For Your Home Loan: Hud'S Settlement Cost Booklet - U.s. Department Of Housing And Urban Development (Hud) Page 20
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48processing services that are involved within these services. Many lenders require a
lender’s title insurance policy to protect against loss resulting from claims by others
against your new home. A lender’s title insurance policy does not protect you.
If a title claim occurs, it can be financially devastating to an owner who is
uninsured. If you want to protect yourself from claims by others against your
new home, you will need an owner's policy.
To save money on title insurance, compare rates among various title insurance
companies.
If you are buying a newly constructed home, make certain your title
insurance covers claims by contractors. These claims are known as “mechanics’ liens”
in some parts of the country. In many states, title insurance premium rates are filed
with the state and may not be negotiable, but other title service related charges may
be. Be sure to ask your title agent about any available discounts such as a reissue
rate or a simultaneous issue discount.
Title services also include the services of a settlement agent.
Settlement
practices vary from locality to locality, and even within the same county or city.
Depending on the locality, settlements may be conducted by lenders, title insurance
companies, escrow companies or attorneys for the buyer or seller. In some parts of
the country, a settlement may be conducted by an escrow agent. Unlike other types
of settlement, the parties may not meet around a table to sign documents. Ask how
your settlement will be handled.
Survey
Lenders or title insurance companies may require a survey to disclose the
location of the property. The survey is a drawing of the property showing the location
of the house and other improvements on the property. You may be able to avoid the
cost of a new survey if you determine the company who previously surveyed the
property and request an update. Check with your lender and title insurance company
on whether an updated survey is acceptable.
Homeowner’s Insurance
As a condition to settle, many lenders will require that you procure
homeowner’s insurance, flood insurance or other hazard insurance to protect the
property from loss. Don’t forget to shop for the best rates.
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