Buying your own home is one of the biggest financial decisions of your life and that means you don’t want to leave anything to chance when you consider the amount of money that is involved.
Your mortgage lender will be lending you some of the money you need to buy the property and they will want assurances that the title is free and clear of any liens. This gives them the security they require and gives you peace of mind that the property is yours as long as you make all of your payments.
When you use someone like the Sunnyside-Title-Company they can arrange the insurance you need to protect you and your lender against a claim being made against your property that challenges your ownership rights.
Here are some key points to consider about what title insurance is and why it is needed.
Title insurance allows you and your lender to manage risk
The fundamental purpose of title insurance is to get protection from the prospect of any potential title risks or flaws that come to light.
You don’t want to discover that there is a potential problem with your property title or that a subsequent ownership claim is made that threatens your security.
Title insurance provides protection from these threats by transferring the financial risk of a claim being made to the title insurance provider. This gives you and your lender peace of mind.
What type of title insurance do I need?
There are two types of title insurance. Lenders and owners’ title insurance.
As the description implies, both products serve a specific purpose. Lender’s title insurance is usually required by your mortgage company as a protection for the security they are taking against your property in return for lending you money.
Owner’s title insurance might be considered more optional but it is just as important. It gives you protection against any previous ownership or title issues coming to light at a later date.
What you are doing with title insurance is transferring the risk to the title insurance provider and giving yourself an added layer of financial protection in the process.
What does a typical policy cover?
A typical title insurance policy will cover critical property ownership aspects such as encumbrances and liens. It also covers potential issues with the title paperwork.
A policy also often aims to protect you from financial loss or harm caused by forgery or fraud. It should also usually cover issues arising from a failure to observe restrictions or limitations recorded in the title.
Exclusions that you need to know about
You are not covered for unreported liens that are not revealed in public record searches.
You also won’t be covered for environmentally-related risks or a number of government privileges on your property.
How long does protection last?
Title insurance is normally valid for the length of your mortgage term with lender’s title insurance.
Buyers’ title insurance typically remains in place throughout your ownership of the property.
When you consider what is at stake and what a typical title insurance policy costs it should be considered a small price to pay for the peace of mind it can offer to you as a homeowner.
