What Is Title Insurance?

by c21commonweath_ldowling 25. October 2019 12:53

Buying a home is a complicated process. There are pages and pages of paperwork to fill out, and seemingly endless fees to pay. The costs associated with buying a home add up. Are you tempted to cut some corners and avoid some costs? Maybe you think you should forgo title insurance to save some money. This could be a mistake.

When someone sells a piece of property, the public records office in their city or county records the title change. Sometimes problems arise. When things go wrong, the sale could even be delayed until the buyers or sellers rectify the problems. Title insurance protects the buyer, lender, and seller from any extra costs resulting from the delay.

How Does Title Insurance Work?

Before a real estate transaction can go through, any claim or liens against the property owner must be settled. Title insurance covers the cost of these claims. Normal insurance protects you from what could happen in the future, but title insurance protects you from what has happened in the past.

How Do I Get Title Insurance?

In most cases, lenders require title insurance for anyone taking out a mortgage. Your real estate agent or lender will typically purchase coverage from one of the five major title insurance underwriters in the United States.

What If I Don't Get Title Insurance?

Going without the protection offered by title insurance exposes you to serious financial risk. Imagine purchasing a home without title insurance only to find that the previous owner owes back taxes. As the new owner, these taxes are now your responsibility. If you don't pay the taxes, you could lose your new home, but if you have title insurance, the fees will be taken care of.

Title insurance is not just for individuals. Banks and other lenders use it to protect themselves from borrowers who might default on a loan.

Many real estate investors specialize in foreclosures, which often have issues with titles. Title insurance protects everyone from the risks associated with these properties. If you want to be as successful as a real estate investor, or if you just want to protect yourself as a homeowner, title insurance is essential. Don't risk losing your money or your property—make sure you have title insurance.