Title insurance is one of many decisions you will need to make on the journey to home ownership. While your attention is focused on other important documents that you need to collect and sign, be sure you also understand how title insurance can help you. Choosing a reputable insurer and securing robust coverage can protect your home investment for a cost that most buyers consider very reasonable. Here’s what you need to know about how title insurance works and how much you can expect to pay for it.
Is Title Insurance Paid As A One-Time Fee?
Most types of insurance coverage, from healthcare to homeowner’s policies, send a bill to you each month that you must continue to pay to keep your coverage. However, a title insurance fee works differently; with title insurance, you only pay for the policy once, as a lump sum fee. Most often, this is paid at the same time as other closing costs.
Perform due diligence and make sure that you are buying a title insurance policy for yourself. You may see a line item among your closing costs that accounts for title insurance, but this is likely referring to the lender’s policy. The lender will require that you purchase title insurance for them; however, this coverage will not safeguard you. You must have a separate policy for yourself to protect your interests.
What’s In A Title Insurance Fee?
Title insurance is an affordable way to protect your home. Because it is paid as a one-time fee, you can accurately plan exactly how much it will cost, and that price is based on the overall value of your home. Most often, the price of title insurance will be calculated between 0.5% and 1% of the home’s value making it scale alongside your funding ability. Those purchasers who buy a more expensive home will see a slightly higher price for title insurance than those buying a less expensive home.
Do I Need Title Insurance?
When you receive a copy of your estimated closing costs, you will already have quite a few line items factored in and may then begin to wonder if title insurance for yourself is worth the expense. The reality is that issues can arise after you have taken possession of your home and can threaten your financial well-being as well as your right to claim the home as your own. In the worst case scenario, you may lose the home entirely.
While a title insurance policy will vary in coverage depending upon the insurer and the type of policy that you choose, you can generally expect protection that includes:
- Boundary issues
- Some zoning challenges
- Errors in the history of the property
- Undisclosed liens
- Formerly unknown claims against the property
If you purchase a home and later find out that there were one or more liens placed against the property that you didn’t know about, you would be required to pay that debt, even if you had nothing to do with the origin of the debt(s). However, a title insurance policy would protect you from that type of financial obligation.
Will My Policy Ever Expire?
A title insurance policy is paid as a one-time fee, and then it covers you for the entire duration during which you own the property, no matter how long you stay. However, you cannot bring a title insurance policy with you, since it is specific to each home; that means that if you had title insurance on the home that you are moving from, you will need a new policy for your new property.
While title insurance typically cannot be transferred, it also applies to your beneficiaries. That means that if something happens to you and the home passes to a beneficiary listed in your will, they will also be covered by the title insurance policy. The only time a title insurance policy expires is when you or your eligible beneficiaries no longer reside in that property, making title insurance a “one and done” type of protection.
Trust The Experts To Help You Protect Your Investment
You may still have questions about what title insurance can do for you, and the good news is that you don’t have to do this research on your own. The experts at Mathis Title Company would be happy to answer any questions you have about insuring your property. Contact our team of professionals to learn more, or to schedule an appointment to get started with a policy of your own.