What You Need to Know about Title Insurance

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house2You know you need car insurance, health insurance, and even life insurance, but have you ever considered title insurance? Until you buy your home, title insurance may not even enter your mind, but as you approach the landmark of homeownership, title insurance definitely needs to become a priority.

What is Title Insurance?

First of all, a title to a home is the evidence that the owner lawfully possesses that property and can sell it off. Title insurance is essentially an insurance policy that protects you against any property loss or damage you could potentially experience on your home due to liens, encumbrances, or defects in the title. While standard insurances like car, life, and health insurance protect against future events and is paid monthly or annually, title insurance protects against events that occurred in the past that you may not know about. It’s paid in a one-time premium at the close of your home’s escrow.

Protect Yourself From Risk

In an extreme case, you may buy a house that the seller actually doesn’t own. There have actually been cases of renters posing as sellers! But in most instances, title issues aren’t criminal, just complex. Having title insurance protects you from those complexities, like if a seller co-purchased the house years ago with a person he no longer speaks to and doesn’t think to obtain that person’s signature before the sell date. Or a seller might have inherited the home under the terms of a will that turns out to be invalid. Title insurance covers these issues and keeps you safely in your home.

Protect Your Largest Investment

Buying a home is a major decision, and you don’t want to commit to that investment without some type of protection. When you purchase a home, you’re not actually purchasing the building or land, but the title to the property and thus the right to occupy and use the space. Until you pay off your mortgage, the home and land are not technically yours. If the title that you purchase is riddled with problems, you risk losing it and ultimately your home.

The bottom line? Title insurance makes simple sense.