title insurance

What Is Title Insurance?

Real estate is the nation’s largest market, making the purchase and sale of real property essential to the health of the U.S. economy. These transactions are never without risk, however. That’s why title insurance has been protecting American homeowners for more than 125 years.

What Common Title Problems Does It Cover?

Every property has a history, and that history can affect your right to own and enjoy your home. A title search can help uncover — and remedy — title defects tied to your property. Then, subject to the terms of the policy, your owner’s policy of title insurance can provide protection from title problems that may become known after you close your transaction.
These title issues could include things like:

  • Errors in public records
  • Unknown liens
  • Illegal deeds
  • Missing heirs

What Types of Title Insurance Policies Are Available?

Your closing costs might include two types of title insurance policies, but do you know how these policies differ?
Title insurance policies include:

Lender’s Policy

If you’ve ever mortgaged a home, chances are you were required to purchase a title insurance policy. This lender’s policy (often called a loan policy) is required by most lending institutions as a way to insure their security interest in the property. This policy protects the bank or other lending institution for as long as they maintain an interest in the property (typically until your mortgage is paid off).

Owner’s Policy

However, as a buyer, you also want to protect your investment — and the ownership rights that come with it. This is why it’s wise to purchase an owner’s policy of title insurance, which will protect your rights as the homeowner for as long as you or your heirs have an interest in the property.
Both title insurance policies not only pay valid claims and legal fees to defend against hidden title issues, but also help to decrease ownership risks by providing a thorough title search prior to the issuance of either policy.

Refinance Transactions

If you’re considering refinancing your mortgage, you may be surprised to see that you are required to purchase a new lender’s policy of title insurance. This is because a lender’s policy only provides coverage for the life of a loan. When a home is refinanced, the life of one loan ends and another begins. Thus, a new lender’s policy for title is required. Because an owner’s policy provides coverage for as long as you or your heirs hold an interest in the property, there is no need to purchase a new owner’s policy when refinancing.

Contact us for more information about how best to secure your purchase with title insurance.