Helping your borrower understand the need and cost of title insurance is crucial.
To some borrowers, title insurance may sound like an unimportant extra but the inherent value it represents can be a life saver if troubles should arise with the title of their property.
20 years ago, Canadians had never heard about title insurance but today, it is in fact required by both conventional and MIC lenders.
As industry professionals we are all too familiar with the need for title insurance to finalize a deal. It is extremely important for the borrower to have protection against any losses or damage that is caused by the title of the property. It is just as important for the borrower to be aware of the added closing costs as well.
So where did the need for title insurance come from?
In the beginning, title insurance was marketed as a replacement for survey certificates. As it developed, lenders realized that the true benefit was coverage for fraud or other title defects. Lenders felt that the coverage went beyond what a traditional written Solicitor’s Opinion provided. As a result, title insurance has now been adopted as a requirement of most lenders at closing.
It’s a good idea to prepare your borrowers for this cost in advance of closing. Title insurance is not overly expensive in the grand scheme of a property purchase. However, any additional costs can be upsetting to some borrowers if they aren’t aware of them.
They’ll see it set out on the closing documents at the lawyer’s office. It’s in your best interest as a broker to work the cost of title insurance in when estimating the closing costs for your borrower. Doing so will avoid any last-minute surprises and stressors. And as always, if you have any questions, the underwriters at Kokanee Mortgage are always here to help