Title insurance: The benefits of buying a policy

published: January 16, 2015

Title insurance ensures that you will be the sole owner of the property you are trying to purchase.

Seth, a real estate lawyer, explains what title insurance provides: “Title insurance is an insurance policy you pay for once, at the closing table, when you buy your home, and what it does is it ensures that you are the only homeowners for this property and that the seller who sold it to you had every right to sell you the property.”

There are two types of title insurance policies:
1. Lender’s Title Insurance: Protects the lender’s security interest in the real estate. It is issued in the amount of the loan and gradually disappears as your mortgage loan is paid off.
2. Owner’s Title Insurance: Protects your interest and is issued in the amount of the purchase price of your home.

Why purchase title insurance?

When you purchase a home, most likely it will have had several ownership changes. At some point there may have been something that could later cause you trouble. For instance, a past owner may have forged a signature when transferring title or there could be unpaid real estate taxes. Title insurance covers you if a problem such as this arises.

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VIDEO TRANSCRIPT:

SETH: What is title insurance? Title insurance is a insurance policy you pay for once, at the closing table, when you buy your home, and what it does is it ensures that you are the only homeowners for this property and that the seller who sold it to you had every right to sell you the property.

SETH: It also gives you insurance that all of the real estate taxes on the property are paid right up until the date of closing or occasionally a time after the date of closing.

SETH: Title insurance is regulated in every single state very, very strictly and title insurance, the amount that you pay, will be determined by the overall purchase price of the house.

SETH: Title insurance is important to buy because it allows for very easy selling in the future. That’s it’s number one value. It also will help in case there is any fraud. While it doesn’t happen very often, it does happen for the amount of insurance that you’re getting and considering it lasts for as long as you own the home, and you’re only paying for it once, it gives you this fantastic security blanket on your purchase so that you know no one can ever knock on your door in however many years and say, “You don’t own that house. I do.” And you can say, “No, here’s my title insurance policy, so even if you’re right, I’m at least getting my money back.” So that’s the number one value of it.