After saving money for years and scoping out the real estate market, you’ve found your dream house. The exterior is lovely, and the interior checks all your boxes. As long as the bones are good, you’re ready to buy the house yesterday.
Unfortunately, during the closing process, you’re confronted with an expense you weren’t expecting—title insurance. You’re already handing over a bunch of cash for your down payment. What’s the point of purchasing a title insurance policy?
Title insurance covers you in the event that your house’s title has defects. The title, which is the legal document listing you as the property owner, is examined prior to closing. The title search will examine the chain of title and attempt to uncover any existing liens or encumbrances on the title. In other words, it should confirm that you will receive the title free and clear before you close on the property.
People make mistakes, though. The title examiner who scrutinized the title for the current owner might have missed something. This detail might mean that the current owner does not, in fact, own the property and is therefore unable to rightfully sell it. In other cases, previous owners might have engaged in outright fraud.
So, even though a title search was performed every time your target house was previously sold, a free and clear title is far from guaranteed. For a one-time fee, you can have peace of mind that you will not have to spend thousands of dollars defending your ownership of the property.
Lender’s vs. Owner’s Policies
There are usually two types of title insurance policies you need before purchasing a home: lender’s and owner’s. The lender’s title insurance policy is actually for the benefit of your mortgage lender. Although you’re the one with the most (financial) skin in the game, the lender would also lose money and collateral if things go south. Therefore, you’ll probably need to purchase a lender’s title insurance policy.
The owner’s title insurance policy protects you. The policy will legally and financially absolve you from any title defects that come to light after you purchase your home. The policy will list the particular claims from which you will be insulated. Again, you won’t have to pay monthly premiums with either type of title insurance—one-time fees will generally cover you and your heirs for as long as you own the property.
We’ll Make Closing Simple For You
The homebuying process is, understandably, overwhelming for many people. Our firm believes that everyone should get a chance to fulfill the dream of home ownership. We can be there with you at every stage of the transaction so you can have peace of mind and financial security for years to come. Call us at (305) 227-4030 to set up a time to talk.
Law Office of Ray Garcia, P.A.
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