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Title Insurance
Title insurance is a type of insurance that protects both home buyers and lenders from financial loss or legal challenges due to problems with the ownership of a property, also known as "title defects." It's a one-time premium paid at closing, so there are no ongoing monthly payments.
Here's a breakdown of what it covers and why it's important:
The two
Types
Lender's title insurance
Protects the lender's financial interest in the property until the loan is paid off.
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Owner's title insurance
Protects the homeowner's ownership rights to the property for as long as they own it.
It protects against
Hidden claims on the property
This could include unpaid taxes, liens, or even unknown heirs who may have a legal claim to the property.
Forgery or fraud
If someone forged documents or misrepresented their ownership of the property, title insurance can help cover legal defense and potentially even help you keep the property.
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Errors in public records
Sometimes, mistakes or typos in public records can create title defects. Title insurance can help correct these errors and protect your ownership.
Easement disputes: If someone claims a right to use your property in a way you weren't aware of, title insurance can help defend your ownership rights.
Why it's important
Peace of mind
Buying a home is a big investment, and title insurance gives you peace of mind knowing you're protected from unexpected problems with the ownership.
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Protects your investment
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If a title defect arises, it can cost you a lot of money in legal fees and even cause you to lose your home. Title insurance helps cover these costs, protecting your investment.
Required by lenders
Lenders require borrowers to purchase a lender's title insurance policy to protect their investment in the property.