Buyer Knowledge: Do You Really Need Title Insurance?
The essential role of title insurance.
Do you really need title insurance? The simple answer is, yes. We’re going to walk you through the major reasons why, no matter what—you are going to need title insurance. Throughout the process, we’ll throw in some common FAQs to remind you that you are not alone in this journey. We’re here to help you navigate your home buying process and there’s truly no one better to have by your side than our team. Now, let’s get you up to speed on title insurance.
Title Insurance Defined
Let’s start with the basics. Title insurance comes in two forms—the Owner’s Policy and the Lender’s Policy. These policies are there to protect either the owner or the lender and can prevent the loss of property if any issues with the title are discovered. These two types of insurance are vital to understand as you move through the home buying process. Sometimes undiscoverable defects can come up after the title search. Title issues may include forgery, fraud, or clerical errors. You can typically expect, when buying a home, that the lender requires you to purchase title insurance in order to proceed. Do not be alarmed by this as it’s common practice for this type of purchase.
Owner’s Policy vs Lender’s Policy
For a one-time fee, an owner’s policy protects your property rights as a homeowner for as long as you own the home and applies if you plan on refinancing your mortgage. The owner’s policy covers legal claims and potential defects that may arise after the title search.
If a homeowner obtains a mortgage, a lender’s policy may be required by the lending institution to protect the lender’s financial interests for as long as the homeowner owns the home. However, this type of insurance does not protect the property owner, and a new policy will be required if you’re considering refinancing your mortgage.
The Role of Title Insurance
A common question we get asked at our office is, “if my title came back ‘clean’ then why does the buyer need insurance?” Honestly, this is a great question—and when it comes up, we know that you’re really thinking comprehensively about the process. In short, you cannot predict everything and some things just aren’t discoverable until you come face-to-face with those issues. that should be discovered regarding a title just aren’t until it’s too late. Working with seasoned professionals like ourselves is one way to get ahead of any unforeseen problems that may arise and protect your property rights. It protects liable parties from the responsibility of a variety of potential title defects like those we mentioned earlier.
It’s also important to remember that while YOU only pay the price of title insurance ONE TIME, title insurance will continue to protect your interest after you purchase your home and is a great way to feel secure after closing.
Where Do I Get Title Insurance?
Last but not least—how do I know where to get title insurance from? This is an easy one to answer. Most settlement companies provide this type of insurance as a standard part of their services. However, always remember, you can choose your title company! There’s more about that here, but, you have the power to pick what company processes your closing paperwork and what company provides this essential insurance. Be wary of extra fees associated with obtaining and maintaining any insurance—this is a common area where some companies love to tack on hidden fees…but, not at Universal.
It’s Essential
Having an awesome title company is a good start, but including all of the wonderful services that we provide along with title insurance can actually make closing easier. You’ll save time, have more power in the deal, and get to closing day on your time and budget. See what we can do for you by starting a conversation with one of our team members today!