The purchase of a home is typically the largest investment one will ever make. What is title insurance? This assures the proper transfer of ownership. And additionally that the buyer is protected from future claims against the property. Over the years, other may make a claim to a specific property. The current owner’s rights, which sometimes involves family members and heirs, may be unclear. In some instances, others such as the tax assessor, IRS, lenders, or contractors also may have made claims against the property.
Prior to closing, the title company performs an extensive search of all recorded documents related to the property. After experienced title professionals examine these records, a preliminary title report is then prepared. This in-depth examination typically allows enough time for the identification of any pending issues and to correct them as needed prior to closing.
There are two types of policies. An “owners policy” which covers the buyer for up to the amount paid for the property. The “lender’s policy” insures the financial institution over the life of the loan. Both policies are one-time expenses. The cost of the lender’s policy is based on the loan amount, whereas the cost of the owner’s policy is based on the purchase price.
However, over time, most home values increase. The insured amount to the buyer is only up to their purchase price. Click here to learn how that can come into play