As you are working through the paperwork for your new home purchase, you likely have a lot on your mind. From funding escrow accounts to fielding home inspections and negotiating any final requests with the sellers, buying a house can be a significant amount of work.
However, in the hustle and bustle of this busy time, do not forget to consider an owner’s title policy for your home. While you may be discouraged from spending any more money on what is already an expensive purchase, title insurance can offer significant protection for the money you are spending on the home.
What Does Title Insurance Do?
Title insurance protects against unexpected situations that arise with the title or claim to a home or property. While a search will be conducted prior to the closing regarding any outstanding liens and other issues with the property, some situations are just impossible to know about beforehand. Title insurance protects you if something unexpected arises, such as a mistake in a deed or a sudden claim from a previously unknown heir that could jeopardize your right to own the property.
The Risks of Buying Without an Owner’s Title Policy
Many people elect not to purchase a title insurance policy for a variety of reasons, two of the most common being that they do not want to spend the additional money and that they hold the mistaken belief that the title insurance that their mortgage lender takes out covers them too. However, a mortgage lender will take out title insurance on a property in order to protect themselves in the event that something is amiss with the deed; their insurance does not protect the buyer.
Title insurance is not an insurance model in which you pay monthly; instead, you pay for title insurance as one lump sum at closing and then you are protected. If you elect not to purchase title insurance, a variety of issues could arise later that could compromise your claim to own the property.
Without title insurance, you could be subject to losing the home entirely, as well as any down payment that you put into the property purchase. If you have built any equity in the home, that could be lost as well, as could any increase in value that you have contributed to the home through improvements, remodeling and such. If you choose to seek legal recourse in order to attempt to keep your home, you are also responsible for any resulting legal fees. A title insurance policy would cover you for all of these expenses.
Claims That Can Jeopardize Your Purchase
Part of purchasing a home includes getting experts involved to review the deed to the property and other considerations such as property lines. However, some issues can compromise your right to own a property and will not have been uncovered during these processes. For example, it may come to light that the original deed to the property was forged or that a previous owner did not report their entire financial situation, which has resulted in undisclosed easement or taxes due.
Previously unknown heirs with a claim to the property may seek to make good on that right at any point, and other liens or issues could simply not have been recorded properly. Some of these issues are impossible to know about until they arise, even in the case of a very thorough search prior to purchase.
Thus, mortgage lenders elect to require title insurance during the transaction to protect their investment. This is a good indication that as a potential homeowner, you should consider title insurance for yourself as well.
Apply for an Owner’s Title Police from a Reputable, Affordable Provider
Title insurance is worth more than just the peace of mind that it provides. It covers any legal fees that you incur as a result of protecting your property purchase, and if a claim against the property is successful, it shields you from financial losses as a result. An owner’s title policy is critical to protecting your home and ensuring that you are secure in your financial future.
Mathis Title Company offers personalized guidance on facilitating the transfer of a property between parties and securing this relationship with title insurance. We understand that the home buying process can feel stressful and overwhelming, which is why we seek to make real estate issues simple. If you need title insurance for your upcoming home or property purchase, reach out to schedule an appointment to discuss your options. We would be happy to help you understand your title insurance choices and make the decision that is right for you.