When you purchase your home, your lender requires that you take out a title insurance policy. This protects the lender down the road should there be any problems with the title to the property.
It’s a nightmare no homeowner ever wants to face — not having a clear title to their home. Problems like this can lead to protracted litigation and uncertainty about the future. Read on to learn how owners’ title insurance works.
2 types of title insurance
If you financed a home mortgage, you already purchased title insurance, but only for the lender. This covers them if there are future claims against the title of the property. But homeowners have no coverage through these policies.
For their home purchase to be covered if liens against the property are discovered later, they will need to purchase owner’s title insurance prior to the real estate closing.
What an owner’s policy covers
When you buy a piece of property, the only way to be certain that the title is free and clear of liens or incumbrances is to hire an abstractor or other professional to do a thorough title search. That, and the abstractor’s certification of clear title are necessary to purchase title insurance.
Your policy covers the home purchase in case it ever gets challenged in court by a long-lost heir or lienholder. If problems arise after the purchase, your policy guarantees that you will not lose your property as a result of a title dispute.
Pay now, save later
The benefits of owner’s title insurance are incalculable. Imagine losing your beloved home in a lawsuit filed by the late owner’s heirs. Spending a little more now provides you with a sense of peace of mind that can’t be overvalued.
