What Do You Mean Its Not My House? – Why Title Insurance Is More Than Just Another Good Idea
Tucked in among all your other closing costs when you buy a house youll probably find a charge for title insurance. If youre taking out a mortgage to buy a house your lender will insist that you take out title insurance. This is more than just one more nuisance charge levied by people who are determined to make a few extra bucks on your home purchase. Title insurance offers you some real tangible security in the event that theres ever a problem with the title to your home.
But I thought thats what the title search was for
When you agree to buy a house you want to be sure that the person selling it to you actually has the legal right sell it. The information about who has rights of ownership to a piece of property may be scattered in all sorts of different places. The way that you find out who can buy and sell the property is to hire an experienced researcher who understands all the things that can affect the transfer of a title from one owner to the next.
Because the information is so scattered though there is always the chance that some little bit of information might not be recorded or found.
Really though what could go wrong with a title?
Lets just say youd be amazed. Weve heard stories that range from the bigamists first wife having a claim on the house to the fasttalking con artist who forged ID papers and sold a familys home while they were on vacation. Most title disputes have far more boring causes an old homeowners loan that wasnt paid off a clerks mistake in filing a document or a dispute arising from a mismarked property line.
So what does title insurance cover?
When you take out title insurance the insuring company will do a full search of the title records to be sure that they are free and clear but theres always the possibility that they missed something. If they did they promise to pay any costs arising from the title challenge and to reimburse you for any losses you incur because of it. In other words if someone does show up with a claim against your deed the insurance company will pay the legal costs of defending against the claim. If you lose they will pay off the cost of the house.
Okay so whats with the lenders insurance and buyers insurance?
There are two kinds of title insurance. Mortgage lenders require only that you buy lenders insurance because theyre looking out for THEIR interests not yours. In the event that a successful claim is made against your ownership of your house lenders insurance will pay them any money outstanding on your mortgage. You however are out any money that youve already paid on the house including your down payments.
Owners insurance covers the entire purchase price of the house. If there is a claim against the property the insurance company will reimburse you any money that youve already paid toward your mortgage and pay off the remainder of the mortgage so that youre not liable for continuing to make the payments on a house that you dont own.
How do I pay for title insurance?
Youll pay for title insurance as part of the closing costs of your house. Its a one time premium that will cover you for as long as you own your home as long as the claim arises from something that happened before the title search was done. There are no monthly payments pay once and you dont have to worry about it again.
Its worth it wouldnt you say?
About the writer: Calum and Kathy MacKenzie are experienced and professional Tampa Florida real estate agents who specialize in helping families relocate to the Tampa area. They’ve lived and worked in New Tampa for eleven years and their extensive knowledge of New Tampa real estate can help make relocation easy.
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