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5 Things to Understand About Title Insurance

Title insurance protects the holder from any losses sustained from defects in the title. Here are five other things you should know about title insurance.

1. It protects your ownership right to your home both from fraudulent claims against your ownership and from mistakes made in earlier sales, such as mistake in the spelling of a person’s name or an inaccurate description of the property.

2. Your mortgage lender is going to require it. Title insurance protects the lender and the secondary markets to which they sell the loans from defects in the title to your home and property. It ensures the validity and enforceability of the mortgage document. Title defects could include mistakes made in the local property office, forged documents and claims from unknown parties. This policy will pay you the same amount of money each month as your mortgage did at its inception. You only have to pay a one-time fee to close on your home. Making an informed decision is important, especially knowing about the extra expenses you might have to incur later on. There are many helpful resources available on websites like to help you understand closing costs in detail. If you are purchasing a home, you should also purchase an owner’s policy which provides coverage up to the purchase price of the home you are buying. In some states it is customary for the seller to purchase the owner’s policy on your behalf.

3. It’s a one-time cost usually based on the price of the property.

4. Discounts on premiums are sometimes available if the home has been bought within only a few years since not as much work is required to check the title. Ask the title company if this discount is available if you are refinancing.

5. Even new construction needs coverage. Even though the home is new, the land isn’t. A title search will uncover any existing liens and a survey will determine the boundaries of the property being purchased. In addition, a builder may have failed to pay subcontractors and suppliers. This could result in the subcontractor or supplier placing a lien on your property. Again, lenders want to be sure the property has clear title, and they are insuring the correct property. Purchasing an Owner’s Policy will protect you against these potential problems and pay for any legal fees involved in defending a claim.


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