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Title Insurance 101: Do You Need It?

Title Insurance 101

The title is a document that proves who owns the property. When you buy a house, the title to that house gets transferred from the seller to you. If there are any problems with the title, such as outstanding liens or mortgages, or if the person selling the house doesn’t own it; title insurance can help protect you from losing your investment.

What Is Title Insurance, And What Does It Cover?

Title insurance is a type of homeowners insurance that protects the lender and homeowner from losses due to title defects. A title defect is anything that would make the title to a property unenforceable. Title defects can be anything from forgery and fraud to undisclosed easements or liens.

If you’re taking out a mortgage to buy a home, your lender will require you to purchase title insurance. This is because the lender wants to be sure that they’re lending you money on a property with a clean title. If there are any problems with the title, the insurance company will pay to fix them or, if necessary, help you defend your ownership of the property in court.

What Are The Different Types Of Title Insurance Policies?

There are two main types of title insurance policies: lenders and owners.

  • The lender’s policies protect the lender’s investment in the property. If there are any problems with the title, the title insurance company will pay to fix them or, if necessary, help the lender defend their interest in the property in court.
  • The owner’s policies protect the homeowner’s investment in the property. If there are any problems with the title, the insurance company will pay to fix them or, if necessary, help the homeowner defend their property ownership in court.

Do I Need Title Insurance If I’m Not Taking out a Mortgage?

You don’t technically need title insurance if you’re not taking out a mortgage, but it’s still a good idea to purchase an owner’s policy. Remember, title insurance protects you from losses due to title defects. So, even if you’re not taking out a mortgage, an owner’s policy can still help protect your investment in the property.

What Are The Risks Of Not Having Title Insurance When Buying Or Refinancing A Home Mortgage Loan?

There are many risks of not having title insurance when buying or refinancing a home mortgage loan. First, if there is a property title issue, such as a lien or other claim, the title insurance company will step in and help resolve the issue. This can save you a lot of money and stress. Second, title insurance can help protect you from undisclosed liens or judgments against the property. Finally, title insurance can also provide coverage for legal fees and other costs associated with defending your title to the property.

How Do You Get A Title Insurance Policy?

You can get a title insurance policy from a title agent, who will issue the policy on behalf of a title insurance company. After choosing a title insurance company, you will need to provide the company with vital information, such as the legal description of the property and purchase price. The title company will then conduct a title search to ensure no outstanding claims or liens on the property. Once the title search is complete, the title company will issue a title insurance policy.

What Does Title Insurance Cover?

Title insurance policies typically cover two main things: title defects and title loss. Title defects are problems with the property’s title that are hard to discover during the title search. Examples of title defects include forgery, undisclosed heirs, or mistakes in public records.

Title loss is when someone challenges your ownership of the property. This could happen if there’s a dispute over the rightful owner or if someone else has a claim on the property, such as a lien or mortgage. If you have to go to court to prove that you are the rightful owner of the property, title insurance will help to cover your legal expenses.

How Much Does Title Insurance Cost?

The cost of title insurance depends on a few factors, including the value of the property and the coverage amount. For most title policies, you will need to pay in one lump sum at closing, but some lenders may require you to pay for title insurance in monthly installments.

When shopping for title insurance, compare the costs and coverage options of various title insurance companies to find the best policy for your needs. Some title insurance companies will allow you to pay for title insurance in monthly installments, but this typically costs more in the long run. You can also get an estimate of title insurance costs in your area using Old Republic’s rate calculator and Fideli Title Company’s rate comparison tool.

What Are Some Common Exceptions That Title Insurance Does Not cover?

The most common exceptions are title defects not found during the title search, and title insurance does not cover these. Other standard exceptions can include easements, zoning changes, or unrecorded liens. Title insurance also does not cover losses from a drop in value due to market conditions or for any vacant land.

It is important to note that title insurance does not protect the homeowner from fraud or forgery. For example, if someone forges the deed to your home and sells it to another party, title insurance will not cover you for this loss.

In conclusion, title insurance is essential to any homeowner’s protection plan. It can help protect you from losses that may occur during the transfer of property ownership. In addition, a title insurance policy can give you peace of mind when buying or selling a home. It’s one way to help make sure that the home you purchase is free of any legal issues that could cause problems down the road. If you are in the market for a new home or are considering refinancing your current mortgage, contact the Unified Title Company family and get help on title insurance.