Opting Out of Title Insurance

When attorney Mark Rutzick sold his home in Fairfax, Va., and bought a new one in nearby Oakton, he made what many might consider a risky move: He turned down title insurance. While lenders require borrowers to pay for the insurance that protects loans against unexpected liens and other claims, owners often have more leeway when it comes to insuring their own home equity.

Since Rutzick's new home had only two previous owners, he says, "The chances of a hidden grantor coming out of the woodwork and saying 'I own it and you don't' is so incredibly small, [title insurance] just seems unnecessary." He estimates he saved himself about $3,600 by not buying owner's title insurance.

While shaving a few thousand dollars off closing costs is tempting, many in the real estate industry recommend against it. Pam Hamrick, vice president of LendingTree.com, says she has seen customers without title insurance policies run into problems that are expensive to clear up. "It's like homeowner's or auto insurance. No one wants to pay for it, but when you need it, not having it is...


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