What Is Title Insurance and Why Do I Need It?

Have you heard about title insurance during your real estate transaction? As you near the closing table, cut through the confusion and dig in to how it can benefit you in the long run.

Title insurance is an important safeguard for both lenders and buyers in real estate transactions. Typically, title insurance is a one-time fee that is a small percentage of the purchase price (about 1%). It helps to identify any potential threats of third-party claims against the title of a home or property that may have been initially missed in the purchase and closing process. Though not always required, title insurance can give buyers peace of mind and save them money down the line if unforeseen title problems arise.

There are two types of title insurance—owner’s and lender’s. The primary difference between the two is as it seems. An owner’s policy works to protect the owner, while the lender’s policy protects the lender. Before closing, the buyer typically pays for the lender’s policy, while in many cases, the seller pays for an owner’s policy. With an owner’s policy, owners can cover the costs of paying off or defending claims with a coverage amount that generally equals the price of the home. A lender’s policy helps the lender to recover the cost of mortgage payments that would have been paid by the home buyer.

Claims can come from a wide range of sources and address many issues, including heirs who have a claim to the property, unpaid expenses, contractor liens from previous owners, easements affecting property rights, errors that were made on the deed, necessary documents, or surveys. It’s important to note, however, that title insurance will not protect you from claims resulting from your own actions or issues that arise after the purchase of the property.

Purchasing real estate can be complex, but our expert team of lenders is here to help you navigate any challenges you may face in the process with ease. Get in touch with us today to learn more about how you can protect yourself when purchasing real estate.