Lux - Illumination

Closing Costs: Title Insurance & Home Insurance

If you’re about ready to buy a home or have bought a house in the past, you probably are very aware of closing costs. Closing costs are definite wake up call when dealing with the home buying process. You’ll find that the home purchasing process involves many expenses, and closing cost are no exception. As if the large down payment and income requirements weren’t enough, closing costs can add substantial fees. It’s important to not just take your lenders word for it when evaluating all the closing costs. Lenders are notorious for adding many nefarious charges. So, you’ll want a reasonable explanation and breakdown on all closing costs presented to you. Some are mandatory, but many can be negotiated or eliminated completely.

The closing cost process will often include mortgage insurance. It’s important to not confuse mortgage insurance with home insurance. Home insurance protects your home and your liability in relation to your home. Mortgage insurance, on the other hand, is designed to protect your lender, should you default. But, you pay for it yourself, just like you would with home insurance. Mortgage insurance can be avoided, if you put down or have 20 percent equity or more.

Another mandatory closing cost you’ll be all too familiar with is title insurance. Title insurance is a lot like mortgage protection insurance in that it’s primary purpose is to protect your lender and not you. Because much of the title work will disclose any problems early, there is very little chance title issues will arise later. This puts the lender in very good shape, risk wise. Title insurance will protect them if any future problems rear their head. The whole conspiracy behind title insurance is that they require you to purchase it, and most often get a kick back for the referral. Meanwhile they receive all the protection for not only free, but also they get paid for title insurance protection.

If you come in to closing with some knowledge about closing costs, you’ll have a big leg up on the average Joe. Most people come into closing and just accept the closing costs as part of the process. Their often so excited to buy a house, they don’t want to miss out due to closing cost technicalities. You can be assured that lenders rely on this way of thinking. Some simple negotiation can help you save on closing costs, like title insurance and even home insurance.