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I recently read an article in the Real Estate section about what buyers should know before closing. The article, however, did not deal with the question of title insurance for the buyer, as opposed to the lender. Does it make sense for the buyer to pay for owner’s title insurance even though the lender is requiring its own title policy?
I always recommend title insurance for the buyer. Too many risks without it. The buyer doesn't pay for the owner's title insurance in my experience.
It depends on the state. In some states, the sellers pay for it on the buyers behalf. In Minnesota, the buyers pay for their own policy. Either way, you end up paying for it (either when you buy the property or when you sell it).
Buyers title insurance is very important, especially if you have a significant down payment. Lenders policy only protect the lender and the loan amount.
You must have an owner's policy if you are obtaining financing. The lender will also have a lender's policy, but not without you have an owner's policy.
If you paid cash, it's up to you, but I've never closed a cash deal where they didn't want the safety net of the policy for the "just in case".
Lender's policy is part of lender's closing cost expenses for getting mortgage. Owner's policy is optional and it totally depends up on when and where you are buying. I have clients who bought foreclosure and short sale home and where thankful for the policy inplace for few surprises that popped up later. However I do have new construction clients who declined and they are happy..so far no issues.
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