HomeBuying 101: What Is Title Inurance?

When you buy a home, the title to your property is your certificate of ownership, just like the title to a car. But, unless you are the first owner of a property, many other people may have owned the property before you. How do you know for certain that none of the previous property owners is going to try to cause trouble and try to claim ownership to the property? What if there are outstanding taxes or liens on the property that you didn't know about? What if the seller is not the true owner of the property? These are all scary questions, but unfortunately, they can also become a scary reality for many homeowners.

This is where title insurance comes in handy. Title insurance can cover your losses in case any problems arise associated with the title aspect of your new home. Studies show that anywhere between one half and one third of all transactions will show a discrepancy or problem in the title of a home sale. Title insurance can take care of these issues and problems, usually without the homeowner even knowing about it! Now, that is peace of mind!

The title company will research your title against all public records to make sure there is nothing that looks like it could be a problem later down the road. Then, if any of those problems do arise later, the title company will cover all costs and fees associated with fixing the issue. Pretty much, the title insurance company is a great advocate to have in your corner!

There are two types of policies, the lender's policy and the owner's policy. If you are being issued a mortgage, you must have a lender's policy. The lender's policy will cover your lender if anything arises with the title to your property. You might also need an owner's policy. The owner's policy will be the policy that covers your losses. Bottom line: The lender policy protects the loan company, the owner policy protects you.

Title Insurance can sometimes be very tricky and confusing. A lot of times there are a lot of questions about the process that you might need answered. By choosing a trusted real estate agent like Hamid Ali, you will be able to get all of your questions answered, and feel confident that you are making the right choice!