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There are a lot of things to think about when buying a home, and chances are title insurance isn’t on the forefront of that list. However, title insurance is a very important part of the home buying process, and many people are not aware of what it is and what it does. We recently sat down with Jean Burr from Legend Title to discuss Title Insurance on our latest episode of the Community Partner Education Series in hopes to educate the community on title insurance and it’s importance.
What is Title Insurance?
Title insurance protects real estate owners and lenders against any property loss or damage they might experience due to liens, judgements, or defects in the title, etc. It also protects you from the possibility that your seller, or previous sellers did not have free and clear ownership of the home and property. There are two types of title insurance, one written for the buyer and one for the lender. Nearly all lenders will require title insurance to protect their investment on the property. An Owner’s policy protects the new home buyer should any problems arise with the title, for as long as they own the home.
How Do You Get Title Insurance?
Soon after you sign the purchasing agreement for your home, your closing agent or escrow agent will launch the process of getting you title insurance. The cost for title insurance is usually a part of the closing costs. This one-time upfront fee will protect you and your investment upfront and prevent any title issues later on.
Once a title order is issued, the title company will do a search on your home as far back as they can go to uncover all previous information and history. Should any issues arise, they will work to remedy them and sort them out.
Most of the time, the real estate agent or mortgage company that you work with will recommend a title company that they work with and trust. You can also find your own, if you choose. A title company should be licensed as it works just like an insurance company. They have underwriters, agents, and sales executives that all have to be licensed. Your title insurance should have the name of the company as well as the name of the underwriter, should you need to get in contact with them.
When Do You Need Title Insurance?
As we mentioned, title insurance is usually required by the lender when purchasing a home. Anytime you are purchasing real estate, it is a good idea to have title insurance. Owner’s title insurance will protect you for as long as you own the home. However, if you refinance your home, you may need to purchase another lender’s insurance. When you refinance your home, you’re basically receiving a new mortgage, therefore a new lender title policy may be required. A new title search will be issued to protect the lender’s investment in the home. Additionally, if you did not purchase owner’s title insurance at the time of purchase, you may be able to purchase it when you refinance.
Title insurance, although commonly overlooked, is a crucial element in the home buying process. It protects your most valuable investment should any issues come up regarding the title of your home. Next week, we will discuss these possible issues that could come up and how they are handled. If you have any questions about title insurance, feel free to reach out to Jean Burr of Legend Title, and she would be happy to answer any questions you may have.
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