Are you someone who is wondering about the three most common types of title insurance? Do you wish to know their individual benefits and drawbacks? If your answer is yes, then you have found yourself coming to the right article.
Here we will talk all about what title insurance is and the three most common types. So let’s dive right into it.
Understanding title insurance
If you are like many people out there who do not know what title insurance is, you have nothing to dismay over.
In simple terms, title insurance is a form of document that aims to protect you from future hurdles with an ownership title when you choose to purchase real estate. You may not know this, but there may be pending problems awaiting you as you purchase a property.
These problems may include unpaid property taxes, an unknown heir who claims they own the property, or even fraud and forgery of previous paperwork before getting the ownership of the property.
These problems can put you at great risk of blacklist frauds, and if not handled according to the law in a professional manner, your ownership of your property may be lost.
That is why it is always a good idea to pay a one-time fee for title insurance and have the insurance company cover your administrative fees as well as protect you from harmful claims against your property by other unknown individuals.
Buying a title insurance
When it comes to owning a property of any sort, a huge proportion of individuals do not know that it is extremely important to own title insurance. Instead of occupying themselves with finding legal title insurance, they allow their property and themselves to run the risk of being illegal or fraudulent.
An escrow or even a closing agent starts the process of insurance once the completion of property purchase completion. When owning title insurance, you would essentially need to pay a one-time fee, which varies from $500 to $3,500 depending on the type of property, the state that the property resides in, value and demand of your property.
Without owning title insurance, your chances of having to deal with enormous property taxes from previous owners are high.
With the help of title insurance, a person can be protected from paying unnecessary high amounts of property taxes by either having an interest in the property or the title insurance company making documents to prove your innocence and links.
For your own benefit, you should hire an advanced attorney service who could help you guide and save you from future hurdles.
Lenders policy
Many people out there do not know this, but there are different kinds of title insurance, each with its own distinctive features and benefits. The lender policy also has another known which is called loan’s policy. A lender policy essentially protects your lender against hassles and problems with the title of your property.
Such problems may be like someone trying to get a legal claim against your property. It must be mentioned that a lender’s policy only works to protect your lender and not you. If, for instance, a bank is involved in your property, they become the lender as long as your mortgage is paid.
Hence this insurance aims to protect them, their interest in your property and their rightful duties towards lending you funds to pay off your mortgage to the property. You should keep in mind that although the lender policy works to protect the lenders from gaining the title of fraud etc., it does not protect you who owns the property. You may still be at risk of financial loss, and thus in order to avoid this completely, it is best that you opt for an owner’s policy.
Owners policy
Although it is a good investment to have a lender’s policy so that your people of interest do not have to suffer a tremendous amount of financial loss or have to go through the struggles of gaining the title of fraud or corruption, however at the same time, you being the owner of your property, also need to make sure that you fully protect your investment which is the property that you own, as well as the ownership rights that come with it.
For this reason, only, it is extremely pertinent that you, too, have an owner’s policy that aims to protect your rights as the property owner and make sure that you do not fall into the fraud category. The owner’s policy aims to protect you as long as your heir, or you show an interest in the property.
Moreover, an owner policy also aims to protect you against attorney fees and any other expenses that are involved when having a claim against your property. The reason why this is important is that sometimes these costs can reach an amount higher than tens of thousands of dollars.
Benefits of title insurance
Now it does not matter whether or not it is a lender policy or owner’s policy as both the title insurance works to prevent a company or you from having to suffer financial losses. For instance, owners’ title insurance can also shield you from certain risks that are contained in the list of risks on your policy.
These may be but are not limited to; unpaid mortgages, fraud, unmarketable titles, unpaid property taxes, a lack of access to the property, easements, and much more.
Keep in mind that in case you decide to sell your home or property of any sort in the future, the title insurance will also help you save from financial losses in case the sale was entirely unsuccessful.
The reason why title insurance stands out from other types of insurance out there is that instead of paying a monthly fee, you would only need to pay one-time fees and have your property protected from big and small problems.
Last but not least, as we have mentioned earlier, it is important to keep in mind that the fees of title insurance are calculated from the location, the demand of your property, the company, and the state you live in.
However, this balance may be different from what is listed on the closing disclosure, but this does not mean that you would have to pay more. It just means that you have to keep in mind the value fluctuations beyond the mortgage loan estimate.
Conclusion
So here you go, folks! We are certain now you have a better idea of what title insurance and the types of title insurance that there are. As said before, it is worth owning one so that you and your lenders do not suffer a financial loss in the future.
