When purchasing a home, you will have the option to purchase Title Insurance. There are two types of Title Insurance Policies, lenders and owners. If you are buying your home with financing, your lender will most likely require a lender policy to protect the amount of your home loan. From there, you will have the option to purchase an owner’s policy, which would protect the entire value of the home.
At this point, you may be thinking, “I have homeowner’s insurance, why do I need title insurance?” While both are great to have, they protect two very different things.
Homeowner’s insurance, like health and car insurance, covers things that might happen in the future. The cost of these policies is based on the insurance company’s estimation of how much they will likely spend on claims in a given period.
Compared to Title Insurance, which protects against things that have happened in the past, is based on loss prevention. Because of that, a more significant percentage of the cost is spent preventing the problems from occurring.
These upfront costs include; cover searching, identifying, and eliminating risks that could be in a future claim. When your escrow officer conducts the search, they typically search the public records. This includes; searching the offices of the recorders or registers of deeds, clerks of courts and other officials, and the title company’s title plant.
During this search, your title professional is looking for things like second or third mortgages, judgments, liens, street and sewer system assessments, special taxes and levies, and numerous other matters. In other words, your title company does its due diligence before issuing a policy.
Your owner’s policy protects your largest financial investment. One out of three residential real estate transactions has an issue with the title. The title office usually resolves most of these issues prior to close.
Another way title insurance is different than other lines of insurance is the cost. Title insurance is a one-time fee compared to a monthly, quarterly, or annual premium over the life of the policy. So when all is said and done, title insurance is probably the best value of everything you paid for during your home purchase process.
For a free quote on title insurance contact your local Escrow Officer today!