Frequently Asked Questions
These are the most common questions homebuyers have around MI and title insurance.
Learn how mortgage insurance can help you buy a home.
Studies have shown that homeowners with less than 20% invested in a home are more likely to default. This makes low-downpayment mortgages riskier for lenders and investors, and MI helps cover this risk in case you’re unable to make your mortgage payments.
It depends on the MI products that your lender supports. You may be able to take a higher mortgage interest rate in lieu of monthly MI payments, or you may be able to pay all or some of your MI up front to reduce the amount of your monthly MI payments. Keep in mind that if MI was not an option, you might be making those same monthly payments to your savings account to be able to afford a 20% down payment in the future; MI helps you to buy a home sooner rather than later.
The cost of MI depends on different factors, like the amount of your down payment with respect to your loan amount, your credit profile and the terms of your mortgage. Your lender can give you a quote for how much your MI will cost.
Under the Homeowners Protection Act, you may not be required to pay private mortgage insurance for the life of your loan. This federal law requires borrower-paid MI to be cancelled once you’ve built up a certain amount of equity in your home. The law applies to many mortgages; talk to your servicer for details on your mortgage. Note, loans with FHA financing require MI payments for the life of the loan. At closing, your lender must give you written notification that there’s MI on your loan and that you have a right to cancel under certain conditions. Each year thereafter, your servicer must send you a reminder that you have MI and that you can request cancellation when requirements are met. Be sure to contact your mortgage servicer to learn more about cancellation. At closing, your lender must give you written notification that there’s MI on your loan and that you have a right to cancel under certain conditions. Each year thereafter, your lender must send you a reminder that you have MI and that you can request cancellation when requirements are met. Be sure to contact your mortgage servicer to learn more.
When it’s time to determine your mortgage insurance options, be sure to talk to your lender. They can tell you which types of MI they offer, so you can decide what works best for your situation.
Title InsuranceLearn why title insurance is so important when buying a home.
Title insurance provides protection against future losses that might result from a variety of possible title defects or encumbrances that existed at the time of closing. It’s a contractual obligation between the homeowner and/or lender and the title insurance company. Before you purchased your home, it may have gone through several ownership changes—and the land on which it stand went through many more. There may be a weak link at any point in the chain that could cause trouble. For example, someone along the way may have forged a signature in transferring title. Or there may be unpaid real estate taxes or other liens. Title insurance covers the insured party (homeowner and/or lender) for any clams and legal fees that arise out of such problems.
The exact terms of coverage are in the written title insurance policy. Some common coverage includes: • Improper execution of documents • Mistakes in recording of legal documents • Mistakes in the indexing of legal documents • Mistakes in legal descriptions of the property • Forgeries and fraud • Undisclosed or missing heirs • Unpaid taxes and assessments • Unpaid judgments and liens • Unreleased mortgages • Incorrect interpretation of wills • Mental incompetence of grantors of property • Impersonation of the true owners of the land by fraudulent persons • Fraud in securing essential signatures • Refusal of lender to provide financing based on condition of title
Whether you’re purchasing a new home or refinancing your existing one, reaching the closing process typically means that you’re nearing the home stretch in completing your transaction. Key points to understand about the closing process: • The closing is also commonly referred to as the signing or the settlement. • The term closing refers to the stage in the transaction when you are signing all of the papers necessary to finalize your purchase or refinance. • It also usually means that most, if not all, underwriting and curative steps necessary to approve the purchase or refinance have been completed. • These prior steps may have included loan approval, successful appraisal, a completed title search and review, curing title concerns, and ordering payoffs of existing liens of record. • Subject to the laws and customs of your jurisdiction, the closing may take place at your home or chosen location or the office of the lender, realtor, title company or attorney. • If your transaction is a purchase, some locales routinely conduct the closing for the buyer and seller at the same time together, which is called a roundtable closing. At this location, a notary or attorney (the “closer”) will present the documents necessary for your signing and provide you with an explanation of each so that you understand every document you sign. You will be instructed to sign where necessary and documents that require notarization will be notarized by the closer. • Once completed, the closer will return all of the executed documents to the title company and/or lender for final review so your transaction can be funded, recorded and finalized.
1. Submit order 2. Process order 3. Schedule closing 4. Perform closing 5. Issue policy
At your closing, the closer will be presenting you with many closing documents to review and sign, especially if you are getting a loan. While this stack of paperwork can seem overwhelming at first, it is important to keep in mind that most of what you want to know about your transaction will be contained in just a few of the closing documents. The remaining documents are forms needed as part of your lender’s and title company’s process. Within these closing documents are your individual loan terms, payment information and breakdown of the money in your transaction, including fees and payoffs being made on your behalf. You should have already been provided with an initial closing disclosure, as required by law, three days ahead of your closing date. This initial closing disclosure provides you with your loan amount and terms, your anticipated monthly payment and fees associated with your transaction. Because of this, the documents presented to you at the closing should not contain any surprises or terms different from the initial closing disclosure. You’ll want to review the following: • Your Monthly Payment, as it will break down what you must pay each month. Your monthly payment may cover more costs than just the loan repayment, such as escrows for taxes and homeowners insurance. • Your Note, as it contains all of the terms of your loan and is your legal agreement to repay your loan. • The Closing Disclosure or Settlement Statement, which is a complete breakdown of all the money involved in your transaction, identifying who is being paid and how much. • The Security Instrument, usually called a Mortgage or Deed of Trust, which is the document that shows your home is being used as collateral for the loan and is the legal document that creates the lender’s lien against your home until the loan is repaid in full. • If your transaction is a refinance of your primary residence, you will also have a Right of Rescission form that provides you with three days after the closing to change your mind about completing the loan transaction. Becoming familiar with some or all of these forms ahead of the time may help the closing go more quickly, but is not mandatory because the closer will be ready to explain the documents and answer any questions you have during the process.
There are some title defects that cannot be uncovered with even the most thorough search. For example, a search will not uncover that a valid deed was indexed improperly in the land records. Title insurance will protect you from these types of defects.
Although highly recommended by experts, you do not have to purchase title insurance if the buyer is paying cash for a home. The vast majority of banks and other mortgage lenders, however, require that the borrower obtain a Lender’s Policy of Title Insurance equal to the loan amount.
A lender’s policy protects the lender up to the amount of their outstanding debt on a mortgaged property. The value of the policy decreases as the loan principal is paid down and expires when the mortgage is paid in full. An owner’s policy is purchased in an amount equal to the purchase price and does not expire when the mortgage loan is paid in full or upon the sale of the property. The owner’s policy is there to protect the owner’s equity in the property.
Often, local custom dictates whether the buyer or seller pays for the premium, but sometimes sellers and buyers negotiate who will pay the premium without regard for local customs and procedures. Be sure to ask your real estate professionals which customs are predominant in your area and discuss your options.
No. You have the absolute right to choose your own title insurance company. Also, if anyone insists that you use a company they recommend, it’s in your best interest to ask them if they are receiving a commission or referral fee from the company or if they are affiliated with the company they are recommending. Title agent commissions can be as high as 85% of the title premium you are being asked to pay.
A Financial Stability Rating® (FSR) is a leading indicator of an insurer’s stability. FSRs are based upon a series of quantitative ratios and considerations which together comprise Demotech’s Financial Stability Analysis Model. FSRs are accepted by government-sponsored enterprises, including Fannie Mae, Freddie Mac, and various programs of the United States Department of Housing and Urban Development (HUD), mortgage lenders, as well as a number of umbrella and agents’ errors and omissions insurance markets. We currently have an “A Exceptional” FSR from Demotech, Inc.
We’ve worked with nearly every major lender over our more than 35-year history. Based on our financial strength, stability and experience, we’re recognized and accepted by nearly every major lender.
While the title insurance policy is issued at closing for a one-time premium, based upon the loan amount and/or purchase price, you should start shopping for title very early in the process of buying, selling or refinancing a home. The preparation that leads to the title insurance policy being issued begins in the very early stages of the closing process.
Title insurance companies offer industry-standard title policies adopted by the American Land Title Association (ALTA) or an individual state’s land title association. You can be assured that the policy protection provided in a Radian Title Insurance Inc. policy adheres to these standards.
As its name suggests, enhanced policies provide the owner additional coverages. The quote you receive on our website is for a basic policy, which is provided at a considerable savings over that of our competition. You will find that the enhanced policies issued by us are offered at rates below the basic policies of our competitors. Examples of coverage included in an enhanced policy, that are not covered by a basic policy, include: • Mechanic’s Lien Coverage for work provided prior to the date of the policy • Zoning coverage to ensure that your property is zoned for a single-family residence • Coverage that your property is in a properly created subdivision • Coverage in the event that you are required to remove an existing structure on the property (other than a fence or boundary wall) due to a previous owner’s failure to obtain the necessary permits • Post-closing forgeries that affect your ownership interest
While settlement/closing practices may vary from state to state, the following representatives are generally present at the closing for a purchase transaction: • Homebuyer • Buyer’s real estate agent • Home seller • Seller’s real estate agent • Title company representative (where applicable) • Attorney(s): The buyer, seller, and lender may have attorneys • Closing agent • Mortgagor (the person buying the house) • Mortgagee (the lender) At the closing, the seller signs the documents, transferring property ownership to the buyer. The buyer receives as well as signs documents related to the mortgage agreement and ownership of the property. The buyer also pays any closing costs and escrow payments. Closing documents include: • Final closing disclosure form • Mortgage note stating the buyer’s promise to repay the loan amount • Mortgage or deed of trust securing the mortgage note • Any additional documents required by the lender
Closing costs in a real estate transaction are the costs, including any fees, commissions, taxes, or miscellaneous expenses associated with the transaction. The actual “closing” occurs when the title of the property is transferred from the seller to the buyer. Closing costs are incurred by the buyer and the seller. Closing costs vary from state to state. In general, these are some of the typical closing fees you might find in a real estate purchase or sale: • Record fees • Notary fees • Commissions for listing and selling agents • Mortgage payoff balance • Bank processing fee • Origination fee • Appraisal fee • Tax servicing fee • Flood certification fee • Title insurance
A homebuyer will typically pay between 2-5% of the purchase price in closing fees. For example, if the home you purchased cost $200,000, you can expect to pay in the range of $4,000 to $10,000 in closing costs.
A title search is the process of verifying the seller’s right to sell or transfer property ownership. The title search provides early warnings of any title-related restrictions or flaws that must be dealt with before the property can be sold or refinanced. Prior to closing, we’ll examine public records (such as liens, recorded documents, judgments, taxes, street easements, sewer assessments) for any matters that could affect property ownership. After a title search is complete, we’ll issue a title policy, which protects the owner or lender from loss or damage from liens or defects in title.