5 Quick Facts About Title Insurance You Need to Know

Often a standard step while getting a mortgage, but maybe not as well understood or known, is a little something called title insurance. Before closing on a home, you’ll be required to purchase it, but what does title insurance do and why are you required to have it?

If you’re dishing out the money to buy it, you may want to know.

1. What is title insurance?

When people think of insurance they often jump to car, rental, and life; all of which protect you against potential future events.

Title insurance though is a policy insuring against events that occurred in the past of the real estate property and the people who owned it.

2. Why do you need it?

Having title insurance means you’re protected against claims from defects. Defects can be anything or anyone claiming an ownership interest in your property, improperly recorded documents, fraud, liens, and much more.

If you don’t purchase it, at the most extreme level, the seller may try to sell you a home he or she doesn’t own. Title insurance will step in and help you.

3. Who do you trust to help you choose an insurer?

If you’re getting advice from the seller, the real estate agent, and the lender, trust your lender. After all, they’re backing your home with a large amount of money under the guarantee the property is truly yours.

4. How much does it cost?

Cost will vary based on state, but unlike other insurance programs where you pay monthly premiums, you’ll only pay once for title insurance and it’ll last as long as you have interest in, or own the property.

5. If the lender has a title insurance policy, why do you need it too?

A lender’s policy covers the lender, not you. It’s as simple as that. An owner’s policy will cover the people who own the property.

What other questions do you have about title insurance?