Answering Your Top 5 Questions about Title Insurance

You've purchased your new home. You've signed a purchase agreement and secured a loan. All that's left are the minor details. Your real estate agent has informed you that you need title insurance.  But what is title insurance? Do you really need it? 

What is Title Insurance? 

Title insurance is a way to protect all parties in a real estate transaction.  In the U.S., our land records are not perfectly documented. Title disputes can arise when property is transferred from one hand to another. Any time you transfer the title to property, you are at risk from various errors in records. 

Why do I need it? 

Any real estate transaction involving the transfer of immoveable property involves risk.  The deed to your new property often does not dig deep into the previous ownership details, so there are chances that a claim may arise later from a third party. A third party may claim the property belongs to him. If this happens, your transaction will be declared null and void. When this happens, both the lender and the owner/buyer are at risk.

 What is title insurance? 

What are the types of title insurance? 

There are typically two types of title insurance. An owner's policy protects the owner/buyer of the property when there is a claim on the property. An owner's policy will ensure that you are covered from losses due to court costs and loss of equity.  A lender's policy protects the lender's investment in case of a claim. 

How does it protect me? 

Your title insurance policy will protect you from a variety of risks not only during closing but for years to come once you've settled into your home. Title insurance can protect you from the following risks: 

  • Clerical errors on the title
  • Undisclosed heirs that come forward
  • Unknown liens against the property
  • Forgeries
  • Fraud

At any time, a third party can make a claim against your home and you will be required to move until the matter is settled in court. Title insurance will protect you from these risks. 

What are My Next Steps? 

Your real estate professionals are available to help you navigate through the title insurance process. Shortly after you sign your purchase agreement, your real estate agent will speak with you about title insurance. Title insurance is usually a one-time payment that protects you and your property. Find out more about who will pay for the owner's policy and the lender's policy and any additional coverage you may require. As long as you are responsible for payment, you can select the title company for your policy. 

Title insurance can make the purchase of your new home stress-free. As you sign your mortgage and move into your new home, title insurance can give you the peace of mind when it comes to making your house a home.