Today, we are talking about title insurance. Title insurance is a requirement. However, let’s discuss why we should have it.
Benefit of Title Insurance
Title insurance protects the lender and the homeowner against any claims regarding the legal title of the home. Your mortgage lender will require this because it protects them from defects linked to the title of your home.
Policy Types and Costs
The cost of title insurance is based on the loan amount of your home. It is a one-time charge that is included in your closing cost. There are two types of policies that you should consider purchasing. The lender will require the lender’s title policy. However, there is also an owner’s title policy. You can buy this to protect you (all the way up to the purchased price of your home) if title defects are found.
Just like homeowner’s insurance or car insurance, each title company has its own rates. As these rates can vary, you can shop around for the right title company for your home. In addition, discounts can be offered under certain circumstances. For example, if the home was purchased in the last few years by the previous owner. However, most contracts will state that the seller chooses the title company. So, if you are interested in shopping around for a title company, you may want to ensure that when you write your contract for the purchase of the home, you include that you would like to choose the title company.
A big misconception is that if you purchase new construction, you do not need title insurance. This is wrong because there may have been previous liens on the land of the property. In order to ensure that nothing negatively impacts the title of your home, we want to make sure that there is a title policy on the property.
It is a requirement to have a lender’s title policy. Whether or not you choose to have an owner’s title policy? Well, that is up to you!