Tips & Advice
What is the difference between a lender’s and owner’s title insurance?
Lender's title insurance is designed to protect the interests of the mortgage lender, and it covers only the portion of the equity that is owned by the lender. Owner's title insurance is crafted to shield the interests of the homeowner, and it provides coverage for the homeowner's equity in the property.
What does title insurance not cover?
Title insurance only covers claims and encumbrances that are already a matter of public record. Title insurance does not cover claims that haven't yet been recorded. Also, title insurance offers no guarantee that you are buying a legally created parcel of land that can be used for the purpose of real estate development.
A title defect is an obstruction that affects the ownership of a property. Liens, mortgages, and judgements are all title defects, and they can prevent a seller from legally offering full rights to a piece of property. A title defect can also take the form of improper wording of the title document or improper recording of the ownership or property forms.
Does title insurance need to be renewed?
If you have an owner's policy, your title insurance will never need to be renewed. However, if you refinance your home, the lender will require you to invest in a new lender's policy. A new lender's policy is required even if you are refinancing with the same lender with which the original purchase of the property was made.
How long does title insurance last?
With lender's title insurance, coverage lasts until the mortgage is paid in full. With owner's title insurance, coverage lasts for as long as the owner or the owner's heirs have interest in or ownership of the property that is covered.
Who is protected by title insurance?
Title insurance can protect both mortgage lenders and homeowners. The standard title insurance policy that is required by mortgage lenders when purchasing a home is known as a lender's policy, and it covers the lender's portion of the equity. Owner's title insurance is also available, and this protects the homeowner's equity in the home.
Is title insurance necessary?
Title insurance is required if you have a mortgage, because mortgage lenders demand this protection when making a loan. Property insurance can go a long way toward protecting your interests if you are making a real estate transaction. Even though you are paying thousands of dollars to purchase a piece of real estate, there is a possibility that another party could claim ownership of this real estate in the future if the seller didn't have full ownership of the property. If you have title insurance, the title company will defend you if a party challenges your ownership.
What is a property title search?
A property title search is a process in which documents that reveal the history of a piece of real estate are gathered and examined to establish ownership. A property title search is used to ensure that a property's seller is legally entitled to sell the real estate, and it ensures that the buyer is getting full rights to the property.
How much does title insurance cost?
Title insurance may range from a few-hundred dollars to more than $2,000 for a one-time premium, but the national average for this insurance comes in at around $1,000. The cost of title insurance is impacted by factors such as the amount of work required to conduct a title search and the legwork necessary to remedy title defects.
Title insurance provides protection to real estate owners and mortgage lenders against loss or damage they might suffer stemming from liens, defects, or encumbrances related to the title of the property they hold. If you're about to purchase a property, a title insurance company will search the property records to make sure the seller is the true owner of the property and is legally able to sell it.