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What is Title Insurance and Do I Need It?

Getting title insurance is one of the standard steps homebuyers take before closing on a house.

What exactly is title insurance? When property is financed, bought or sold, a record of that transaction is generally filed in public archives. Further, records of other events that may affect the ownership of a property, like liens or levies, are also archived.

When you buy title insurance for your home, a title company searches these records to find – and fix, if possible – several types of ownership issues. First, the title company searches public records to determine the property’s ownership status. After this search, the underwriter will determine the insurability of the title. However, even the most experienced title professionals may not find all problems associated with a particular property. Some risks, such as title issues due to filing errors, forgeries, or undisclosed heirs, can be difficult to detect.

After the title company finishes searching, it also provides a title insurance policy that will help protect you from a variety of issues that might be discovered later. If you take out a mortgage loan when you buy your property, your lender will require a loan policy of title insurance. This protects the lender’s interest in your property until your loan is paid off or refinanced.

On the other hand, an owner’s policy of title insurance insures your ownership rights to the property. Even though you’ll pay for this policy only once, your coverage will last as long as you own your home.

Buying a home may well be the largest financial investment you ever make. So, do you really need title insurance? The answer to that is a resounding yes! There are a number of things that could go wrong and it protects you, the purchase or owner, against a loss that may arise by reason of a defect in your ownership or an interest you have in real property.

So, even though you might hate the thought or plunking down money to buy title insurance, it will most certainly ease any worries you might have and give you peace of mind!

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