What is title insurance and why should you consider purchasing it?
One of the many decisions you will face during the purchase of your new home is deciding whether or not to buy title insurance. What is it and how does it work? Is it a necessity? What does it accomplish and is it right for me? These are all questions that prospective home buyers should have about this form of insurance policy.
What is Title Insurance?
When you purchase a home you are not only buying the foundation, walls, and roof—you are also buying the right of ownership to the land or, its title. The property’s title is the legal proof that you are the owner and title insurance protects you against problems relating to the title or challenges to your ownership.
Title insurance is usually bought at the same time as you buy your home but it could possibly be obtained at any time after you purchase the home. The policy protects you for as long as you own the property. It is a one time premium payment that is not the same as homeowners insurance or private mortgage insurance. Like other insurance policies, the cost will vary based on the location, cost of the home, and the contents of the policy itself.
What Does it Protect Against?
This policy covers you against losses with the home (before or after closing)if you have any problems with the title—known as title defects. A title defect is a problem with the title that could threaten ownership of the property. These problems range from fraud and forgery, zoning problems, and tax liens to the possibility of an heir of the previous owner making a claim on the title.
As well as covering a broad scope of defects, title insurance provides coverage for the past, present, and future.
Is it Worth it?
The biggest plus of title insurance is the peace of mind that it provides. The one-time premium provides comprehensive and broad coverage on the title of your new home. Title insurance covers a wide range of problems from the past that were overlooked or that could come up in the future—that sounds like a relatively inexpensive way to protect your property from a possible financial disaster!
As we mentioned previously, the cost and coverage of title insurance will vary so make sure to check with your lawyer so you know what you are getting for your dollar. There are many options when looking to obtain title insurance but Stewart Title is the preferred title insurance provider for Magellan Real Estate Lawyers.