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Title Insurance And Why You Need It
Hello Everyone, I just wanted to share with you some information i seem to get asked about a lot.
What is Title Insurance and why do you need it?
A clean or clear title is important because the title is what gives you ownership of a property. Imagine buying your dream home, closing the deal and then realizing the previous owner hadn’t paid property taxes for several years. Those taxes remain charged against the property and as the new owner, you are responsible.
Or perhaps two sales ago someone sold the home without getting the signature of an estranged husband who now wants to stake his claim. Or a previous owner hired a contractor and failed to pay the bill. The contractor may have placed a lien on the property. There are many different scenarios that could have taken place , and tracking down every last possibility is more than one can do on their own. This is where title insurance comes in.
Unlike most insurance policies, you pay just a one-time fee and your property is covered for as long as you or your heirs own it. If you are taking out a loan to buy your home, the lender will require you to purchase lender’s title insurance to cover its investment. While you are in the escrow phase of your purchase, the title insurance company will conduct a comprehensive search to make sure there are no such surprises lurking in the files in some forgotten corner of the county courthouse. The title company agent looks at deeds, wills, and trusts, tracing the history of the property back for many years.
What’s covered depends upon your policy. If you purchase only lender’s title insurance and end up losing your home to a previously unknown lien, your mortgage will be paid off. However you won’t get anything to cover the payments you’ve made, including the down payment. You’re out a house. That’s why experts advise buyers to get an owner’s policy as well.
A standard policy will generally cover you up to the purchase price of your home. It is up to you to discuss the different policies available to you with your title agency to assure you are covered from all possible angles. It is in your best interest to shop around. You can purchase title insurance from whichever company you choose. But the reality is that your lender probably has a preferred title company and it is much cheaper to combine your policy onto the lender’s.