What Is Title Insurance and Why Do I Need It?
Real Estate is traditionally a person’s largest investment and most valuable asset. Without title insurance, you could lose your home.
Title insurance is insurance against loss or damage resulting from title defects that can include undisclosed heirs, misfiled liens, real estate tax issues, fraudulently signed documents and mortgage releases, filing errors, etc., to name a few.
One out of every three searches reveals a title or public record defect that’s fixed before the transaction closes.
In today’s climate where fraud and forgery are on the rise, purchasing title insurance is crucial for a home buyer.
Types of Title Insurance Policies
Title insurance is typically a combination of two policies: an Owner’s Policy and a Lender’s Policy.
As a buyer, you want to protect your investment – and the ownership rights that come with it. An owner’s policy of title insurance will protect your rights as the homeowner for as long as you or your heirs have an interest in the property.
If you are working with a lender to purchase a home or refinance an existing mortgage, purchasing title insurance is a lender requirement. This policy protects the bank or other lending institutions for as long as they maintain an interest in the property.
When purchased simultaneously with an owner’s policy, the lender’s premium is reduced to a simultaneous issue fee – 100.00-125.00, depending on the type of policy. Mortgaging or refinancing the existing mortgage in the future can also afford the property owner a reissue rate discount which could save as much as 40% of the lender’s premium.
How Will Title Insurance Protect Me?
Some common examples of problems covered by an Owner’s Title Policy Include:
- Improper execution of documents
- Mistakes in recording or indexing of legal documents
- Forgeries and fraud
- Undisclosed or missing heirs
- Unpaid taxes and assessments
- Unpaid Judgments and liens
- Unreleased mortgages
- Mental Incompetence of grantors
How Much Does Title Insurance Cost?
Title insurance is a one-time premium. Title insurance rates are regulated and filed with the state. In other words, shopping rates will not produce differences in premiums. Typically, it is less expensive than your annual auto insurance.