So you’re in the middle of, or about to start the home buying process. You may have heard the term “title insurance” being flung around and you’re thinking – “Great! Another thing to learn!” We’re here to help break this down in simplest terms.
- What is Title Insurance?
- This insurance protects home buyers and mortgage lenders should there be a problem with the title that causes financial loss. There are two types:
- Lenders title insurance protects the lender through the buyer paying for it
- Owner’s title insurance offers protection for the buyer. It is an optional expense as part of closing costs.
- How does Title Insurance work?
- Before a real estate sale closes, the property must have a clear title. Title companies run searches to find claims against the property. Public records are searched to ensure the seller’s ownership and uncover liens or claims, or any issues building violations that could stop the title from being clean. While insurance typically protects against future problems that could arise, title insurance deals with things that have happened in the past.
- Types of issues covered by Title Insurance:
- Ownership claims from another party
- Errors in the records
- Forgery or fraud in documents
- Judgements against the property, like liens and lawsuits
- Unrecorded easements and covenants that could restrict the use
- Why is it important?
- If you don’t have Title Insurance and there is a defect in the title or ownership, you and your lender could face severe financial loss. Should there be unpaid property taxes, it will be up to the buyer to pay them. They could potentially lose the home if they cannot pay the taxes.
- The cost of Title Insurance:
- Title insurance can cost anywhere between $500 and $3,500 based on your underwriter and location. Usually, the policy for lender and owner have to be purchased together. This ensures protection for both parties. On closing day, the insurance policy is purchased as a one-time payment.
Want to learn more? Follow along on social or contact me today to learn more about the home buying process.
Email: traciehall@kw.com
Cell: 401.602.5162
@traciehallrealtor
