What is Title Insurance?
As you probably know, insurance is a way for you to protect yourself from financial losses. Especially when you’re making a large investment like buying a home, it’s important to minimize any risks. That’s where title insurance comes into play. It offers protection for buyers and lenders against legal disputes tied to a property before the current transaction.
Like health or car insurance, title insurance helps you protect what you’ve worked hard to build. But, it differs in a few essential ways:
- Title insurance protects you from events that have already happened versus future circumstances.
- You pay a one-time premium at closing versus monthly or annual payments.
Mortgage lenders today require borrowers purchase a lender’s title insurance policy at closing when borrowing money to purchase or refinance a home. But, this policy only protects the lender. In the event of any issues with the title, a homeowner without title insurance is completely unprotected.
Benefits of Title Insurance
If anything comes to light that could impact your title, title insurance becomes a valuable ally. For example, if someone claims an ownership interest in the property, or there is flawed documentation, fraud, forgery, liens, or easements. Title insurance protects buyers and lenders from negative financial impacts associated with any resulting legal actions, including lawyer’s fees, court costs, and settlements.
Again, the stakes with major investments like a home are high. Not having title insurance can impact you and your heirs who inherit the property from you. That’s why it’s important to cover your bases with title insurance.
Remember that when you work with an agency like Mattingly Ford Title, you minimize your risks. We undertake due diligence to ensure there aren’t any defects in your title. But, we can’t eliminate the possibility of things like fraud or erroneous documentation, because that’s outside of our control. That’s why we always recommend title insurance, so you’re covered in the event of a title defect.
Title Insurance Costs
A few factors can affect the cost of the premium of a title insurance policy. These factors can include the property’s purchase price, location, and the amount you are borrowing to purchase the property. Typically, a policy can cost $500 – $3,500. If the seller is purchasing the owner’s policy, the cost could be factored into the sale of the property.