When you buy a home, one of the questions at closing is about title insurance. As long as you are getting a mortgage, you will need a lender’s policy – this policy will protect the lender. But what about you? And do you need it?
An owners title insurance policy protects you against covered title defects, like a previous owners debt, liens and other claims of ownership that may have happened prior to purchasing your home. It protects you against previous problems. It is a one time cost when you buy your home and it covers you for the time you or your heirs own the home. You may never realize you need title insurance until you go to sell your home and something comes up in the title search.
Some of the common title claims are things like a lien, it could be a federal or state tax lien that didn’t show up on a title search. Sometimes it is mortgages that were not recorded as paid in full by a previous title company. It may be as simple as a form that was not filled in correctly at a previous sale. The risks that it covers are things like fraud, forgery, undisclosed heirs, improper legal description and recorded notices of zoning violations.
Title insurance is least expensive if you purchase it when you buy your home. They are already doing a title search and a lenders policy, so the owner’s policy is much lower as they are already doing the searches needed.
I always suggest to my buyers that they purchase an owners policy – it’s a one time fee and it protects your interest in your home. You may never need the insurance but if you do, it can save your home – or the equity you have in your home. For many, the cost of title insurance is probably less than the phone call or initial consultation with a lawyer if you do not purchase title insurance and find that you need it!
Leslie Vanderwerf, NMLS ID#335509, Cross Country Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website
