Am I crazy not to buy Title Insurance

[Anonymous]

Anonymous wrote:

Anonymous wrote:Not buying it is extremely stupid. And the rates are regulated in most states (not Virginia). The policy terms and premiums are standardized by state.

Literally no lender will make a loan without it and no commercial buyer would ever buy without it. Think about that for a minute. Parties with way more knowledge than you buying in bulk with ability to incur the loss have decided it is worth the cost.

FYI, the premium is once per house. So $5k if you sell in 6 months is a rip off. If you hold for 25 years, it’s dirt cheap.

And one last comment about suing the title company. Are you an idiot. Do you really think that for the hundreds of dollars in fees (maybe $1200 tops) a title company is going to risk a $1M liability. Do the math on that. 1,000 closings a year. Average price $800K. Title company makes $1.2M gross and pays staff, overhead etc. maybe nets $200k. And they have $800M in liability. To make zero they would be allowed one mistake every 4 years. To make $100K per year, one mistake every 8. Come on.

Fixed your typo in first line.
Otherwise, great post. Esp the bolded part.

Also, the lender is only buying title insurance to cover the outstanding balance on the mortgage. If your home appreciates 30%, the lender still only could get the outstanding balance (which should decrease over time). But your equity could increase quite a bit.

[Anonymous]

Anonymous wrote:No buying it is extremely stupid. And the rates are regulated in most states (not Virginia). The policy terms and premiums are standardized by state.

Literally no lender will make a loan without it and no commercial buyer would ever buy without it. Think about that for a minute. Parties with way more knowledge than you buying in bulk with ability to incur the loss have decided it is worth the cost.

FYI, the premium is once per house. So $5k if you sell in 6 months is a rip off. If you hold for 25 years, it’s dirt cheap.

And one last comment about suing the title company. Are you an idiot. Do you really think that for the hundreds of dollars in fees (maybe $1200 tops) a title company is going to risk a $1M liability. Do the math on that. 1,000 closings a year. Average price $800K. Title company makes $1.2M gross and pays staff, overhead etc. maybe nets $200k. And they have $800M in liability. To make zero they would be allowed one mistake every 4 years. To make $100K per year, one mistake every 8. Come on.

Of course it's worth the cost to THEM. Because YOU'RE paying for it for them. They make you pay for THEIR title insurance.

I just bought a house with all cash the other day. Because I paid all cash, there was no lender requiring that I buy lender's title insurance. The question was do I buy owner's title insurance for me. I declined. Another poster said it's cheap -- it isn't. I'd rather take the risk and litigate if there's a problem down the line. Chances are almost certain that they're won't be.

[Anonymous]

For all the people quoting lender's use of title insurance as evidence of its value - we have to remember that the buyer pays for the lender's insurance. So they have absolutely no incentive to change this structure. If someone was paying the $4,000 plus for me to get title insurance, I'd never turn it down either.

Funnily enough my loan officer at the mortgage company said he is starting to see his customers turn down title insurance. The payouts are very rare and it's the title company attorney's pushing it on their clients because the attorney gets a commission from it.

What's also galling is that buyers can get a lower rate if the seller of their property had previously purchased title insurance and it is only being updated for things that may have happened on the seller's watch. But the seller has to produce the actual paper copy and not an electronic version.