The process of filling out all the paperwork and ensuring that everything is in order when purchasing a home can already feel overwhelming, leading many people to choose to cut down on that aspect of the project as much as possible. For this reason, it is common for homebuyers to either skip title insurance entirely or to misunderstand the papers that they are signing about their lender’s title insurance policy.
Some may also be hesitant to add further costs onto their closing, but the reality is that owners title insurance is an effective and affordable means of protecting your investment – as long as you acquire the right policy.
What Is Owners Title Insurance?
An owner’s title insurance policy is a means of protecting your new home purchase. Every time that a significant event (such as a sale) happens to a property, it is recorded in the deed to that location. The transfer between the seller and the new owner is documented – but what happens if something goes awry during this step?
If someone forges details or previously unknown aspects about the house are not properly recorded, the person who owns the home could find themselves in a lot of trouble. Owner’s title insurance protects people against these potential outcomes.
Title insurance is a powerful protector. However, one of the most common misunderstandings when buying a home revolves around title insurance and how buyers assume that they are covered when really they are not. In order to understand how this happens, you must be sure to keep your terminology straight. When someone makes a property purchase, they will almost always be responsible for paying for lender’s title insurance during closing.
Many people see this line item and assume that, because it is title insurance, they can use the policy since they are paying for it. However, lender’s title insurance is a purchase mandated by the mortgage lender to protect their investment, and the policy is only for them. If you want protection, you will need to acquire your own separate owner’s title insurance policy.
The Areas That Title Insurance Can Address
If forgery or other issues affect your title, you may not actually have a legal right to own your home unless you have a title insurance policy to protect you. Similarly, if the previous owners had a lien on the property that they did not pay off and this was not disclosed to you before you purchased, you would become responsible for paying off that lien – even though you had nothing to do with its origination in the first place.
Title insurance can also provide for your legal fees if you must go to court to contest ownership of your home, such as if a previously undisclosed or unknown heir or inheritor has made a claim on your property. Some policies cover zoning issues and a wide variety of other concerns as well.
Budgeting For A Title Insurance Policy
Closing costs are expensive, and not everyone is eager to add more to that total. However, title insurance is affordable – usually between .5% and 1% of your home’s value – and is paid as a single lump sum upfront rather than in installments like other insurance. This keeps it affordable and much easier to budget for, after which you are covered for the entire time that you own the property.
Is Owner’s Title Insurance Worth It?
Owner’s title insurance is a powerful tool to secure the purchase that, for many people, ends up being the largest financial decision of their lives. If a problem arises with your title and you do not have an insurance policy, you could lose your home, as well as any equity that you have accumulated in it over time.
Compared to this potential loss, the temporary and affordable bill for an owner’s title insurance policy is generally considered to be worth the expense. However, what exactly should be covered is unique to you, and you can discuss your options with an expert title insurance provider.
Trust The Experts To Provide Comprehensive Information To Get You Started
Whether you are still learning more about title insurance so that you can make an informed decision or you are ready to lock in a policy and review options for riders and coverage, be sure to trust a reputable firm. The professionals at Mathis Title Company would be happy to help you understand all of your options and create a title insurance policy that is customized to your specific needs. Reach out to learn more about our services or to schedule an appointment to get started on title insurance.