Title Insurance Simplified

One of the largest investments you"ll make is buying your dream home which can also be a decision that can have impact on your future finances. It"s quite necessary to know ow to protect your investment from potential title issues. The NAIC or the National Association of Insurance Commissioners brings some light to this topic:


What is title insurance about?

Title insurance is an insurance policy that can protect real estate owners and lenders from financial loss if title problems arise after buying or refinancing a property. Possible dilemmas may include lost or incorrectly filed deeds, property access issues and so on.

For instance, if there is an unpaid mortgage on the property you just bought, you may be held liable. Without title insurance, you might have to settle a dispute by paying legal costs. Losing a dispute could cost you not only your money but also the equity you have in your home and perhaps even ownership. Title insurance is mainly designed to cover legal costs to settle the dispute.


Where can I buy title insurance?home

A title insurance can be bought from a title insurance company or a title agent. You need to make sure that they are licensed to do so. In some states, lawyers are allowed to sell title insurance and their opinion can be a substitute for title insurance.


What are my rights?

You are not really required to go for the suggested title company or closing agent. You have the right to choose the best title insurance company for you. You can do some price comparisons but you still need to search for licensed title companies. Make sure to ask the right questions such as the fees and the separate charges. You can also try to ask if you can get any discounts.

Some title insurance companies may be affiliated with lenders or home builders. You can ask the person making the referral if they have any affiliations with the recommended title insurer.


house2 Types of Policies

An owner"s policy protects you  if a title issue arises after you buy your home for the full price of your home plus legal costs. This policy is issued for the price you paid for your home, and will cover you as long as you have an interest in the property. It"s not a requirement to purchase an owner"s policy.

A lender"s policy only protects the lender if a title issue is met after the property is bought. It is issued for the mortgage amount and as you pay down your loan, the coverage decreases. This policy ends once you pay off your mortgage. You would likely purchase this type of policy if you borrow money to buy a property.

So, the next time you plan to buy your own house in the future, keep this policy in mind to protect what you worked hard for.

If you want a more visual explanation of what Title Insurance is, check out the following video: