Title Insurance For Your Home: How Does It Work?

If you wish to consider buying a home, then a vital step is obtaining title insurance. This is a legal concept confirming that you have received ownership rights of the property from its owner. 

If there are financial or legal problems with the sale, your purchased home could cost more than the purchase price in unforeseen complications. Such situations give rise to title insurance. 

Therefore, you must have this form of insurance when you intend to buy a home. You will be shown below how this type of insurance can protect you while purchasing a home.

Magnifying glass on title insurance paper

Home Title Insurance 

This is a type of insurance policy meant to protect the home lender and home buyers from any losses or damages caused by bad titles. Title Insurance usually covers claims filed against a title, such as conflicting wills and back taxes.

Several things could spoil your legal ownership of your home or property and make your title go wrong, from legal complications to code violations. For instance, you might discover after you have purchased a house that the seller does not have a legal claim to it or the home is being disputed with another party. 

Additionally, this type of insurance protects you from unexpected issues that can render your title invalid. For instance, when you visit a title company like Steve Izzi PA, you would be less likely to encounter such title problems. In addition, title companies ensure that the seller has the legal right to transfer the property to you. 

Home title insurance policy

Types of Home Title Insurance 

Home insurance has two types; lender’s and owner’s title insurance. Both of these insurance protects different participants in property transactions.

  • Lender’s Title Insurance Policy 

Before obtaining a home, a lender would require the borrower to buy the lender’s title insurance policy. The title company will issue this policy and will mark the end of the title search. This title protects the lender against potential losses if the seller is not legally eligible to transfer the title right.

The lender would be covered up to the amount stipulated by the mortgage. However, only the lender would be protected by such a policy. A lender policy would not protect you if you are not personally insured or are saddled with back taxes. However, you would be covered by an owner’s insurance policy.

  • Owner’s Title Insurance Policy

Owner’s title insurance policies are usually purchased to guarantee against potential issues or problems. Though optional, an owner policy would protect the home buyer from common risks such as;

  • Flawed or Erroneous records such as mistakes like incorrect signatures.
  • Liens, outstanding lawsuits, and other restraints against properties that would invalidate the legal claim of the seller.
  • Conflicting ownership claims like will complications and other similar disputes.
Home insurance on chalkboard

That’s A Wrap 

Title Insurance issues are not things that will always occur. However, not having or purchasing an owner’s version of this insurance can be dire if things go wrong. Having this type of insurance policy ensures that you are protected as long as you own the property. 

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