Purchasing a home is a monumental milestone and protecting your investment is a top priority. While title insurance may seem like another mysterious fee, it actually provides numerous benefits for the buyer. In this blog, we will discuss the two types of title insurance and what they cover.
What is Title Insurance?
The purpose of title insurance is to protect from any past title defects and other issues that occurred before the property was transferred to the new buyer. A title to a home refers to the legal rights that the owner has to the home. Title insurance is paid as a one-time, upfront cost instead of a monthly premium that other insurance policies require.
During the home buying process, you will work with a title company to perform a title search of the potential property. A title company, such as Millennial Title, will look at the ownership history and any potential legal claims to ensure the home that you’re purchasing has a clear title. While our team performs a comprehensive search before the home becomes yours, title insurance will protect you well into the future if a defect arises after you purchase the home. Some common title defects include ownership history errors or even unknown heirs. Without title insurance, the buyer will be responsible for legal costs and potentially lose the property.
Lender’s Title Insurance
Many lenders will require you to purchase a title insurance policy when purchasing a home. This policy’s purpose is to protect the lender as long as they have interest in the home. Lender’s title insurance typically lasts until their portion of the loan is paid off or until your mortgage is paid in full. While its main purpose is to protect the lender and provide security in their investment, this type of title insurance will still protect the buyer against liens and title defects.
Do you Need Owner’s Title Insurance?
While not required, an owner’s title insurance policy is a recommended investment to protect the buyer in their transaction. An owner’s policy will protect the buyer if any title defects arise. As stated previously, there may not be any title defects at the time of purchase but potential title claims could date back to before you purchased the property. Without a title insurance policy, you will be required to face the expenses and legal suit yourself.
What does it Cover?
Millennial Title will perform a title search to reveal any initial issues, but not every problem is on the public record. Here are some problems that may arise that insurance will cover:
- Mechanic, construction, and other Liens
- Errors in Public Record
- Ownership Disputes
- Boundary disputes
- Undisclosed wills
- False Impersonation of the previous owner
- Illegal deeds and more
Do you Need a Policy?
Title insurance is required by the lender when purchasing a home. Choosing to purchase an owner’s policy provides greater coverage and a safety net for your investment. While there may not be any existing disputes, a title insurance policy can provide numerous benefits for the buyer.
In addition to coverage for both the lender and owner, Millennial Title offers a simultaneous reissue rate when purchasing both owner’s and lender’s title insurance. If you’re interested in learning more about title insurance, and Millennial Title’s policy offerings – contact us today!