If you’re buying a home around Minneapolis, owner’s title insurance is something you’ll want to get. Title insurance covers the cost of your new home in case any claims are placed on the home from before you bought it. There are many options, but how much do you need for your new home? Here is a simple guide to buying title insurance.
Start with the Purchase Price
It is best to start with the purchase price of the home so that your insurance can buy the house back after undisclosed claims. If you assume that the claims will be placed right away, the purchase price might be the best option for you. That way, the market will be the same without depreciation or additions to your home.
Add in Additions
If you have plans for home improvements, you will want to consider those additions and improvements to your title insurance. With each addition, the price of your home will rise, making your home harder to buy back from claims with your insurance.
Calculate Market Changes
This is where it gets tricky to calculate what the value of your home will be in the future. The housing market can be predicted for the future, but not everything can be accounted for. Talking with professionals about the housing market changes can help you and your insurance provider find how much the price will change over time to affect the value of your home. If you decide that depreciation over time will lower the value of your home, you could also lower the amount you pay for your title insurance.
There are a few cases where a home is inherited or given in a divorce, your insurance provider will ask an appraiser to evaluate the value of your home. This appraiser will be one of the certified appraisers approved by the insurance company. With the new value on the home, consider that the purchase price, and go through the additions and market changes with your insurance provider.
Remember that owner’s title insurance is calculated by a rate percentage of these prices. For example, if you decide to have the policy cover the purchase price, the actual cost of the owner’s policy will be multiplied by the rate percentage per every hundred or thousand you spend, depending on the policy you choose. If you would like to learn more about title insurance, call our insurance experts at Twin City Title. We are here to help you get the most out of your home.