If you’re a homeowner, you probably have title insurance. There are two types of title insurance: lender’s policies and owner’s policies. A lender’s policy is usually a requirement for any refinance or purchase transaction, but an owner’s policy is usually optional. Here’s some more information on title insurance and why you may want to opt in to an owner’s policy.
What Title Insurance Is
Most types of insurance are designed to protect against things that might happen in the future (like if a tree falls on your house, to name one example.) But title insurance is a little bit different. The purpose of title insurance is to protect you and your lender from any potential issues that may have happened in the past.
A Few Examples of How Title Insurance Could Help You
Here are some of the ways that an owner’s policy could save you from unprecedented bills as a homeowner.
- Title insurance protects you from having to pay overdue bills that predate your mortgage.
The previous owner of your home built an addition, but they didn’t finish paying the contractor for the work done. You’re left with a lien on the property even though the scenario occurred years before you bought the home. As the current home owner, you’d be expected to pay up if it weren’t for your title insurance.
- Title insurance can assist you if anyone challenges your claim to ownership of a property.
Let’s say that you bought your property from someone who had recently inherited it from a deceased family member. But unbeknownst to you, the seller wasn’t the sole owner: the will actually stated that half of the property should be left to a second family member – and that family member was not aware of the sale of the property. When you have title insurance, it can help you pay the legal fees for this type of situation.
- Title insurance can protect you against mistakes from the previous title agency, undisclosed easements, forged documents, and more.
Whether by mistake or on purpose, there’s some kind of dispute over your ownership of the property. Or perhaps there’s a dispute over the value of the home and it ends up being worth less than the title stated. In any of these cases, an owner’s policy can ensure you’re compensated for any financial loss that arises from these situations.
So, Do I Need Title Insurance?
As stated earlier, you definitely need a lender’s policy – it’s required. It’s up to you whether to purchase an owner’s policy, but it is highly recommended because it can protect you from many potential legal issues.
Get in touch with Loan Cabin today if you want to learn more about how much title insurance costs and how it can help you. Buying a home can be hard, but we help make it easier!