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Why You Need Title Insurance
Dated: February 10 2018
When buying a house, you will be amazed by the avalanche of paperwork and new terms that you need to deal with. That’s why you get a good REALTOR®; they’ll be able to navigate you through what can be an overwhelming time. To help you out with your experience, today we’re going to look at one of the lesser known aspects of home buying, Title Insurance.
Simply put, title insurance is your protection from anything that may have happened with your new home’s ownership over its lifetime. Most houses have had a number of owners during its existence, and every time ownership changes hands something strange may have happened. Whether it’s a mistake in recording or indexing of legal documents or a mistake in legal descriptions of property, these issues can come back and put the ownership of your home at risk. And it does not matter how long it go it happened, your home ownership might be at stake. Even unpaid taxes, assessment, judgments, liens or mortgages and any type of fraud leave you vulnerable.
When you start the purchase of your new home, your lawyer or lender is going to do something called a title search. It’s basically the history of every transaction your property has ever gone through. They check to make sure every previous mortgage has been paid off, every tax has been collected, and for any disputes between former owners. Unfortunately, it’s not a perfect system.
Luckily, there is a way to protect you and that is title insurance! There are two types of title insurance, Lender and Owner. Lender Insurance is required for any house that you buy with a mortgage. It is coverage for the amount of money you borrow from the mortgage company to pay them back if any title issues come up after the sale. Owners Insurance protects all the equity that you have put into your home. However, if you are buying the home in cash, you do not need to purchase any title insurance, but it is strongly suggested.
One of the great features of title insurance is that unlike auto or life insurance, there is no monthly premium. Instead, it’s just a onetime payment included in your closing costs. While your attorney or agent may recommend an insurance company, you don’t need to use theirs. You are free to look, shop and chose your own insurance company. It is highly recommended that you use your agent’s advice, because they have been working with all the different insurance companies for year, and know whom to trust.
Title insurance is a safety net for everyone. The lender, the buyer and even the seller. While it’s only required to buy it for the lender, it’s well worth the peace of mind to buy an owner’s policy too. It’s a onetime payment that could protect you from a crazy uncle who may one day decide to fight the will that your home was involved in 20 years ago. Title insurance is security and good for your financial well being.
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I am a Broker/Owner and the Chief Operations Manager of Hickory Real Estate Group. We are proud to say that our firm is the largest independent real estate company in our market. We started the compa....