What is Title Insurance?- A title is the evidence or right which a person has to the ownership and possession of land. A defect in that title can be legal right held by someone other than the owner to claim property or to make demands on the owner of that property. Title insurance is a contract to protect an owner against losses arising through defects in the title to real estate owned. If the title is insurable, the company guarantees the owner against loss due to any defect in title or expenses in legal defense of the title pursuant to the terms of the policy.

What is an Abstract? - An Abstract is a history of the title to a particular tract of land. It is not a title! It consists of a summary of the material parts of recorded instruments affecting the title of the real estate. The abstract may be correct but the title imperfect. The abstract is not a guarantee. It is only a record of what has been recorded. It does not judge the correctness of any item it lists. It merely reports them for an examiner to interpret.

Who owns what when you refer to a title? - When you buy a house, the burden to provide clear title is usually the responsibility of the Seller. The Lender will not give you a mortgage until you can prove that the present Owner of the house legally owns it or has title to it.

Owner's policies and lender's policies - A lender will often require a title policy for their protection such a policy does not protect the owner. To protect themselves against possible title defects an owner should purchase an owner's title insurance policy on the property.

Why buy Title Insurance ? - When a person buys a car or consumer goods, they seldom need to know whether the former owner is married, single, divorced; whether they have paid their taxes or are involved in a lawsuit. But when a person buys a home it is necessary to have all that information and much more. For while he may own the property, others may also have rights in the same real estate. A competent investigation can uncover such items as unpaid taxes, easements, restrictions and more. However, all items affecting the title are not contained in a single book, in a single office or even in the same city. Then, add to this, the possibility of human error at a multiplicity of points. Yet what is not in the public records often causes the title problems. For all these reasons and many more, a property owner needs the protection afforded by title insurance.

What does Title Insurance cost ? - The cost is directly related to the value of the property. The higher its value, the more coverage is needed. The premium is small compared to the total purchase price. The premium is paid only once and remains in force for as long as the property is owned by the insured and continues to protect the insured on warrantees after it is sold. (Printed with permission of Old Republic National Title Insurance Co.)

What types of closing costs are there? - Here are two broad categories of extra charges and fees that are typically found in settlement of closing transactions nationwide:

• Charges for establishment and transfer of title. May be referred to as the title search, title insurance, legal fees and settlement supervision fees.
• Costs associated with obtaining the mortgage. These costs include surveys, appraisals, credit checks, loan documentation fees, notary charges, loan origination fees, commitment fees, processing fees, hazard insurance, interest prepayments, Lender's inspection fees and underwriting fees.

What can I expect for mortgage-related closing costs? - Although fees may vary from one financial institution to another, below is a list of fees related to mortgage costs:

• Loan Application Fee - This fee covers the initial costs of processing your loan request, checking your credit history and preparing the loan documents. In many cases, this fee in not refundable even if the loan is not granted. Be sure to ask.
• Property Appraisal Fees - All lenders require an appraisal, usually by an independent appraiser, of the market value of the home being purchased. This opinion gives the lender some confidence that if the Borrower defaults, the Lender can recover its loan money from the sale of the home after foreclosure.
• Loan Origination Fees - (1% to 3% of the loan amount) - Also referred to as "points". Each point equals 1% of the mortgage amount; they represent the equivalent of prepaid interest.
• Mortgage Insurance - (.5% to 2% of the loan amount) - The Lender may require you to purchase mortgage insurance as a condition of granting the loan. The most common reason for this insurance is because the Borrower's down payment is less than the Lender's normal minimum(usually at least 20%). Mortgage Insurance protects the Lender from loss if the Borrower defaults. (This insurance does not protect the Borrower, but may allow the Borrower to get a loan for which he/she might otherwise not get.) For a typical 90% loan, you are charged an annual fee or .5% to 2% of the loan amount.
• Homeowners Hazard Insurance - ($ 180 - $ 400 a year) - You will be required to have a policy in effect at closing with the first year's premium paid in full. This insurance is protection against physical damage to the house by fire, wind, vandalism and other causes. ( Minimum coverage is to be no less than the mortgage amount. )
• Survey ($ 125 to $300 ) - A verification from a surveying firm will assure you that the lot containing the house that you are buying has not been encroached upon by any other structures since the last full-fledged survey was conducted. On occasion, a completed survey is required to ensure that the house and other structures are legally where you and the Seller say they are. ( Buyer or Seller may be responsible for the cost of the survey, depending on the area. )