What Is Title Insurance & Do You Need It?
There’s a lot of confusion out there about the title insurance process and it’s easy to see why. Most other types of insurance are fairly straightforward—we understand how health, dental, and car insurance protects us, but what is a title and why does it need to be insured? Why is title insurance required? Title insurance companies like American Guardian Title get a lot of questions about what we do, so below, we’re answering some of the most common questions we hear from homebuyers.
What is title insurance?
When you purchase real estate, you’re buying the title to the property, which gives you rights to it. Very rarely, someone may challenge the title and claim that they own or have some kind of stake in the property. If there is a defect in your title and someone else has a valid claim to it, this may eventually lead to you losing your home. Title insurance protects against losses in such cases.
Do I really need title insurance?
Yes, you most likely need title insurance if you’re buying a home. If, like most buyers, you’re getting a mortgage from a bank or lender, title insurance is required to protect them from loss should there be a valid claim against your ownership. Unlike health or car insurance, title insurance involves a one-time fee that is paid as part of the closing process on your new home.
You may also opt for something called owner’s title insurance. While lender’s title insurance is required, owner’s title insurance is optional. Lender’s title insurance protects your lender’s financial interests, while owner’s title insurance protects yours.
How long is title insurance good for?
Lender’s title insurance lasts until you have paid off your mortgage and your lender no longer has any financial interest in your property. If you also have an owner’s title insurance policy, this lasts as long as you or your heirs own the property in question.
How much does it cost for title insurance?
The cost of title insurance is based on the price of your home and it also varies from state to state. The average cost of title insurance is $1000.
Do I need title insurance if I pay cash?
If you pay for your home or property in cash, you don’t need lender’s title insurance because there’s no lender involved in the purchasing process. That said, it’s a good idea for you to purchase owner’s title insurance to protect your own assets in case there is a title defect.
Do I need owner’s title insurance for a condo?
Just like with any other property, owner’s title insurance isn’t required for a condo, but it is a good idea to have a policy to protect yourself and your heirs from financial and property loss.
Can I buy title insurance after closing?
Lenders require a lender’s title insurance policy to be in place at closing, but owner’s title insurance can be purchased even after you’ve closed on the sale of your home. There are so many fees and unexpected expenses involved in buying a home, it’s perfectly understandable why you might want to wait to purchase an owner’s title insurance policy! Remember, though, that the longer you wait to purchase title insurance, the longer you’re left unprotected in case of a title defect.
Who can provide title insurance?
There are many providers of title insurance, but we hope you’ll consider our team at American Guardian Title. We do things differently at American Guardian Title—we’re a boutique title company that provides individualized services and innovative processes to make purchasing title insurance a hassle-free experience. Contact us today to get a title insurance quote.