For first time homebuyers, the purchasing process is full of new information and fast lessons on what it takes to buy a house. Many may have never heard of title insurance before, but it’s a critical purchase that must be accounted for when buying a new home. Title insurance provides new homeowners with extra protection that helps them keep their homes and maintain control of their finances if something goes wrong during the buying process, allowing them to make smart decisions about their future. Here’s what title insurance can do for you and when you should be looking to buy it to ensure the security of your purchase.
What is Title Insurance?
Title insurance protects you and the lender in the event that the seller of the home does not have free and clear ownership of the property. This can occur for a number of reasons, most of which are typically unknown to the seller themselves. When you purchase title insurance, a title agent will conduct a thorough search of publicly available records to ensure that the seller truly owns the property. They will look at deeds, transaction records, wills, and other documents and alert all parties of any discrepancies, which can include undisclosed heirs, liens on the property, unpaid taxes, title defects, and other legal concerns that threaten your ownership. After discovering any issues, the title agent will assist you in clearing them up before the sale is finalized. Title insurance continues to function after the transaction is complete, and you can make a claim on your insurance if unnoticed ownership concerns arise later.
Benefits of Title Insurance
Title insurance protects your investment in your new home. If any legal claims are made in regards to rightful ownership of the property, your insurance can help you pay for the legal fees necessary to fight them. Title insurance can also help cover the costs of losses and damages from liens and title or ownership defects. Owners will also benefit from protection in the event of forgery, heirs that claim the property, and other legal concerns regarding the home’s rightful ownership. For lenders, title insurance allows them to protect their own investment and foreclose on the home if necessary.
Without title insurance, you will likely be held liable for issues that occurred with the property before you purchased it. These issues can cost thousands of dollars in legal fees to resolve, negatively impacting your savings and goals. They may also result in foreclosure or the loss of the property as the result of legal proceedings, forcing you to move out and start the whole process over again. With title insurance, you will ideally discover any issues before they become your responsibility and have the financial backing you need to fight undiscovered claims, if any, in the future.
How to Get Title Insurance
Title insurance should be purchased soon after the purchase agreement for the house is signed. Your escrow or closing agent will initiate the process for you. The agent will help you choose a title insurer to underwrite the policy as well. Title insurance requires the payment of a one-time fee, usually around $1,000, though the seller may pay this as part of the closing agreements. After the payment is made, the title search will begin, and you will have a chance to address any concerns you have with the property before closing the sale.
Before purchasing title insurance, it helps to ask a few questions. First, determine whether title insurance prices are regulated in your area. The price of your insurance can vary drastically based on whether or not prices must legally fall within a certain range. Prices can also vary based on how much coverage you and your lender feel you need. For example, some homeowners choose to add restriction endorsements that protect you if construction on your home violates the rules of your subdivision, and some lenders may require additional insurance for adjustable rate mortgages.
Working with Mathis Title Company
When looking for a title insurance company, be sure to choose one that offers a long track record of success and a true partnership during the home buying process. At Mathis Title Company, clients are given personalized attention every step of the way. Founder Robin Mathis personally oversees each closing herself to be sure that her clients are satisfied, and her years of experience in the legal and real estate industries give her a uniquely comprehensive viewpoint. Speak to Mathis Title Company for more information about title insurance and to secure your own policy. In addition to title insurance, the company can provide contract review and preparation, refinancing negotiation, settlement, and mechanic’s lien services, making it a convenient one stop shop for your home buying needs.