When people buy their dream house, they always look at the physical aspects of the house. How big is the yard? How many bedrooms are there? Is there a swimming pool available? Most people overlooked the importance of title insurance. And that can be a huge mistake.
Title insurance protects buyers and lenders from unforeseen liens, property ownership claims, and other costly issues regarding with property titles.
You must familiarize yourself with the two types of title insurance. The first one is called owner’s title insurance which protects the buyer, and the second one is called lender’s title insurance which protects the lender.
What is Lender’s Title Insurance?
When you purchase a real estate, the lender will require you to buy lender’s title insurance, also called loan policy. Unlike owner’s insurance which is optional, loan policy is not. The lender’s policy depends on the amount of your loan, and the insurance only covers the lender against any hidden complications that might surface in your title.
What is the benefit of a Lender’s Title Insurance?
There are a lot of problems that might occur when buying a property. Such issues as title forgeries, ongoing liens, and surprise property claims from possible heirs are common. If these problems arise, the risk outweighs the benefit, and the lender would lose a significant amount of money. When there’s a lender’s title insurance, you don’t have to worry about your lenders pulling away from the deal.
Although a lender’s insurance will not help you much when someone files a property claim against you, it is still important as it protects the property itself. Your lender will make sure that their venture is secured. It will give you the guarantee that no one else can take your property even foreclosures from banks.
Is Lender’s Title Insurance Worth the price?
One might think that lender’s insurance is merely an additional liability after all the buyers are the ones required to purchase it. Fortunately, there are ways you can do to avoid a sticker shock. A quality lender’s insurance policy is definitely worth the cost as it will protect the property from costly disputes and litigations. You will also be assured to learn the property’s history and see if there are any outstanding liens tied to it. Overall, a lender’s insurance will help in guaranteeing a clean title.
Lender’s Title Insurance and Owner’s Title Insurance
At closing, the buyers will be provided an opportunity to buy owner’s title insurance which will protect and benefit the buyers as long as they have affairs or interest in the property.
It is recommended for buyers to purchase an owner’s policy as it is their best protection towards possible title defects that could deny their ownership rights. A great owner’s policy goes beyond title searches as it can also protect the buyers when they decided to refinance or sell their property.
How to find the right title company
Title companies play a significant part in real estate transactions. Transacting with the best attorneys title insurance company is crucial for the success of the negotiation as they are the ones who conduct title searches, provides insurance policies, files the paperwork, and facilitates closing deals. You must look for a company that can be trusted, and is expert in handling title insurance policies.