About Title Insurance

Understanding Title Insurance

When buying a home or property, one of the essential steps in the process is obtaining a title. This legal concept confirms that you have received ownership rights for the property from the seller. But what happens if there are legal or financial problems with the sale? Your new home could cost you more than the purchase price in unforeseen complications.

That’s where title insurance comes in. If you’re shopping for a home, title insurance is a must-have.

What Is Title Insurance for a House?

Title insurance is an insurance policy meant to protect home buyers and mortgage lenders from damages or financial losses caused by a bad title due to title defects. Most title insurance policies cover common claims filed against a title, including outstanding liens, back taxes and conflicting wills.

Many scenarios can create a title problem, which can also spoil your legal ownership of a property and make a title “bad,” from code violations to legal complications. For example, you could discover after purchasing a property that the seller does not actually have any legal claim to it or that another party is disputing their claim.

How Does Title Insurance Work?

The last thing you want is to put money down on a property, only to find that some unforseen and unexpected issue renders the title invalid. A title insurance policy protects you from that.

If you’re working with a title company, you’re less likely to encounter these problems after the fact, but it still pays to have a policy. Title companies offer policies alongside their title search, the process during which a title company ensures that the seller has the legal right to transfer the title to you. With title insurance, buyers and lenders are protected against any deficit in the title that might cause serious losses.

Do You Really Need Title Insurance?

Although lender’s title insurance is almost always required, an owner’s policy is optional. The consequences of not purchasing the owner’s title insurance can be dire. Should unpaid property taxes, outstanding liens or fines for code violations rear their ugly head after the property has been purchased, then the financial burden will fall solely upon the uninsured homeowner.

Title insurance protects the homeowner for as long as they own the property. But if you’re not able to cover these unexpected costs, then you could be responsible for a lot more than you bargained for.

And, if you’re unable to make these new payments, your home could be forfeit to the entity that’s come to collect – all through no fault of your own. The same goes for any complications with the chain of title. Without title insurance, your dream home can very quickly become a nightmare.

The Bottom Line: Title Insurances Protects You From Financial Loss

Buying a home can be a stressful and very emotional experience. Fortunately, there are ways to protect yourself, including title insurance, which can offer peace of mind to new homebuyers. If you’re ready to start looking for a new home, make sure you choose the right title company to help you in your search. There’s a lot of information to sort through and many options to consider.

Need More Information?

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