Among the many considerations when buying a home, whether it is your fifth or your first, are important insurance policies including homeowner’s insurance. However, one coverage not to overlook is title insurance. Title insurance is a critical element for protecting your investment in your new home, commercial building or property, but it is important to read the fine print. Otherwise, you may come away from the sale without the owner’s title insurance that you thought you had.
What Title Insurance Actually Does
Title insurance is a type of protection that specifically applies to a property’s deed or the history of how the property has changed hands over the years. This may not seem to be anything worth spending money on, but a large number of issues can arise with the title of a property, many of which can jeopardize not only the money you have invested in the purchase but also your ownership and ability to live in the residence.
One of the most common problems faced by those without title insurance is that an issue has occurred at some point in the history of the property; this could arise due to documentation errors or even fraud. If your property is affected by such a mistake, this may mean that the person you bought the property from was not the legal owner and thus, they did not have the authority to sell the property to you. In turn, you then are not the legal owner either. In a situation like this, those without title insurance may need to pay substantial legal fees to defend their right to own the building, or they could lose the property entirely.
Another problem that can arise with a deed is undisclosed liens and other judgments. If you purchase a home and afterward discover that there is a lien on the property, this means that the building is associated with a debt that must be paid. The current homeowner is responsible for clearing all loans from the property, regardless of whether or not that person was responsible for generating the debt in the first place. A title insurance policy can shield you from the responsibility of having to pay liens that were undisclosed when you bought the property.
Why Owner’s Title Insurance Critical
These are just a few of the many potential issues that could arise before or after you invest in a property. For these reasons, title insurance is critical; specifically, owner’s insurance is the most important. It is an owner’s title policy that will offer these protections against problems with the home’s title, but you may be surprised to learn that even if you paid for title insurance during the closing, you may not be covered.
How Lender’s Insurance Can Surprise You
One of the most common pitfalls that new homeowners find themselves in is failing to purchase an owner’s title policy. Before closing on a home, you will likely be expected to pay for a title insurance policy, and so many buyers see this line item on their closing documents and assume that they are protected. However, what has occurred is simply the purchase of a lender’s policy.
When a lender provides money (in the form of a mortgage) to purchase a property, they are putting that money at risk. The buyer could default, pay late or otherwise cause them to lose their investment. One way that could happen is if a title issue arises. Thus, lenders require that buyers purchase a title insurance policy for them.
However, this policy only protects the lender. If you want to make sure that you, as the new owner, are also protected, you will need to secure your own separate owner’s insurance coverage. You can expect roughly the same cost paid for the lender’s coverage, but title insurance is not a repeating purchase. Unlike other types of insurance policies, you will not pay a premium each month; instead, you pay once and are then protected for as long as you own the property.
Trust The Title Experts To Help You Secure The Right Policy For Your New Property
Owner’s title insurance is essential when owning a home, but it can feel overwhelming to ensure that all of the details are taken care of. The experts at Mathis Title Company can help you secure the right title insurance coverage for your new property so that you can rest assured that any title disputes will not threaten your investment in your new home or commercial building. Contact Mathis Title Company to learn more or to schedule an appointment to get started.