Congratulations! You are purchasing a home. Surely the next thing on your to-do list is to find a title company.
No? Not even sure what a title company does?
Well, you’re in luck!
Purchasing a home is a big process, made up of hundreds of small decisions over the course of a few months. Title insurance is part of the home buying process that often gets overlooked, but it’s a part that can be the most important. Whether this is your first time buying, or you’re a well seasoned home owner, we’re here to take a bit of mystery out of the process when it comes to title.
What is a Title?
In legal terms, a title is a collection of rights that proves legality of ownership of a piece of real estate. It acts as evidence that a person has rightful possession of their home.
It allows you enter, occupy, enjoy and dispose of the house you live in and land you live on.
In other words, it’s proof you own what you say you own.
What is Title Insurance and What Does it Do?
As with all other types of insurance, such as car or health, title insurance protects you from loss and damages. However, unlike other types of insurance, title insurance doesn’t protect from future infractions but past occurrences.
When it comes to title, the insurance is on the purchase of the property. It helps protect buyers and mortgage lenders by extension, against defects or problems in the transfer of ownership. This includes protection against things like forgery, undisclosed heirs, unpaid taxes or other legal issues from past owners.
What Types of Title Insurance Are Available?
There are two types of title insurance: owner and lender.
Lender title insurance is the most common; almost all real estate transactions require this to be purchased. Purchased by the buyer, it protects the lender.
Owner’s insurance, often paid for by the seller, protects the buyer.
Why Is Title Insurance Important?
While it may seem silly to purchase insurance that protects you from things that have already occurred, title insurance is extremely important when it comes to owning a home.
Title insurance ensures property rights for as long as an individual owns a home. Homeowners insurance and warranties only protect the structure and items in the home, title insurance protects the land it is on.
Title insurance also protects against unforeseen legal issues.
When you are closing on your home purchase the title — ownership — is transferred to you. This transfer happens each time the property is sold, creating a chain of ownerships. If somewhere in the past there was a break in the chain, a defect in a previous owner’s title for example, insurance assures you won’t lose any rights to your home.
How do I Obtain Title Insurance?
To ensure that you will receive title insurance when purchasing your home, speak with your real estate broker or lending agent.
How Much Does Title Insurance Cost?
As with the cost of the home, title insurance varies from purchase to purchase.
Generally, the cost of title insurance falls between $1,000 and $5,000. However, this cost can be negotiated. If you’re working with a broker it can be beneficial to have them speak with the closing agent and seller’s broker to discuss costs.
You can use our title calculator to help learn more!
What Else Should I Know?
Buying a home, whether it is your first or fiftieth time, is a big deal. There are a lot of minute details and small decisions that add up to one of the biggest decisions of all. It can be hard to keep track of all the questions you need answered.
Remember, it’s normal to feel overwhelmed . So, it’s important to surround yourself with a team that makes you feel heard and confident in your decisions. Just as with your new house, find a company that makes you feel at home.