Buying a home is a complex process with many different moving parts.
One of those moving parts is a title guarantee. Currently, Iowa is the only state remaining in the U.S. that guarantees its titles. Title Guaranty is a not-for-profit division of the Iowa Finance Authority that provides low cost title protection for properties in Iowa.
You may be thinking, that sounds great, but I still don’t understand what any of it means. What’s a title? What’s a guarantee? How does it benefit me?
We’ve outlined the basics of Iowa’s Title Guaranty program, and why it is beneficial for many Iowa home buyers.
What is a title? What is a guarantee? What is Iowa’s Title Guaranty program?
At the most basic level, a title is defined as a formal recognition of ownership. A guarantee is a secured agreement.
Iowa’s Title Guaranty program guarantees Iowa real estate property titles and facilitates the mortgage lenders’ participation in the secondary market to help assure the integrity of Iowa’s land-title system.
In other words, it eliminates the risks and prevents losses that can occur when a title is defective and protects home owners against errors and omissions.
How does the program work?
The Iowa Title Guaranty program was started so home buyers in Iowa did not have to be charged an additional fee for the title to their home.
In general, it works by providing a Commitment, Certificate or Endorsement – low cost title protection – for home owners of Iowa real estate. Coverage is issued based off an application. It is then reviewed by an attorney, and a title opinion or a Title Guaranty Commitment is issued to the home buyer and lender.
Excess funds not needed for the operation of the program are reinvested and used for things such as down payments and closing costs.
Who is the Title Guaranty program for?
If you are a home buyer in the state of Iowa you may qualify for Title Guaranty.
Title Guaranty covers all residential property (second homes and investment property as well with a fee of $25, and the value must be $500,000 or less.)
What are the benefits?
Title Guaranty benefits buyers and lenders. Here’s how:
Lenders: Title Guaranty protects lenders to the amount of the outstanding loan on the property. Lenders receive a Lender’s Certificate to guarantee that it is a legal title and their mortgage on the property is valid.
Home owners: Title Guaranty protects buyers up to the sale price and essentially provides an assurance that they have the rights to the property. When issued in conjunction with the Lender’s Certificate, the buyer is eligible to receive an Owner’s Certificate for free if their purchase price is $500,000 or less.
By participating in Iowa’s Title Guaranty program, you are making a smart financial decision in the real estate market, and in turn helping Iowa’s land-title system grow, improve and help other Iowans with their home purchasing.
For more information about Iowa’s Title Guaranty program, go to http://www.iowafinanceauthority.gov/en/title_guaranty_division/ or visit with your local MidWestOne Bank location.