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  • Writer's pictureKent Rodahaver

What is Title Insurance?

If you're currently going through the process of purchasing a home maybe you've heard about "title insurance." In this article, we explain what title insurance covers and why you need it.

Title insurance is a type of insurance policy that provides protection to both homeowners and lenders against financial loss or issues that may arise from defects in the title (ownership) of a property. It is typically purchased during the process of buying a home or other real estate.

Every property has a chain of ownership history. This history is known as the property's "title." Title insurance helps ensure that the title to a property is clear and free from any unknown or undisclosed liens, claims, encumbrances, or other defects that could potentially threaten the new owner's ownership rights.

Common issues that title insurance might cover include:

  1. Fraudulent documents in the chain of title.

  2. Mistakes in public records.

  3. Unpaid property taxes.

  4. Unknown or missing heirs.

  5. Incorrectly recorded legal documents.

  6. Liens or judgments against the property.

  7. Boundary disputes or surveys that were not properly conducted.

Title insurance comes in two main forms:

  1. Lender's Title Insurance: This type of insurance is typically required by mortgage lenders to protect their investments in case there are title issues that affect the borrower's ability to repay the loan.

  2. Owner's Title Insurance: This type of insurance is optional and provides coverage to the homeowner. It helps protect the homeowner's equity in the property and can cover legal expenses if a title dispute arises.

It's important to note that title insurance is a one-time premium paid at the time of purchase and provides coverage for as long as the policyholder owns the property. The specific terms, coverage, and cost of title insurance can vary depending on the location, value of the property, and the title insurance company.

Title insurance is a way to provide peace of mind to both buyers and lenders, ensuring that they are protected against unexpected and potentially costly title issues that could arise in the future.

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