What Is Title Insurance for a Home?
As a homeowner, you believe you own your home. When you buy it, you assume that you can do so without risk or fear of someone else claiming it.
Yet, there are risks associated with purchasing any structure. Title insurance is a type of protection that can minimize this key risk. It can help to give you confidence that you will not lose out if someone else tries to step forward to claim your home as their own. There are a few things you should know about this coverage.
What Is the Risk?
Real estate changes hands many times. One person sells it to another. When you buy a home, you assume that the person selling it to you is legally eligible to sell that property to you. You believe no one else can claim ownership of it.
Yet, this does happen. For example, a home belonging to a deceased person goes on the market by the heir. The heir sells the property to you. However, another heir files a claim against the home claiming he or she owns a portion of it as well. This can negate your purchase of the home. Title insurance can help to minimize this financial loss.
Who Needs This Insurance?
Though it is not a typical type of policy from your standard insurance agent, it is a valuable policy. Ask if they have it before you buy a policy. Most often, your real estate agent and title agency will inform you about the need to carry this type of insurance. Many mortgage lenders require it. It helps protect their investment in your home, too.
The title agency in the transaction will do its due diligence to ensure the title is free and clear. This means that it ensured that no one else could lay claim to the home. However, as in the example above, it is possible for information to come to light after the fact.
Think of title insurance like any other type home insurance. It provides a level of financial protection to you. Without it, you may lose your home and still owe on a mortgage even if someone else claims that property. Find out from your lender if you need to carry this coverage. Some home insurance agencies carry it. Other times, title agencies will help you to get a policy in place to ensure your home has protection before the transaction occurs.