After your title search is completed and the property is found to be free and clear of anyone with a claim to it, title insurance can be issued. Understanding title insurance and how it benefits you is an essential part of the property buying experience.
What is Title Insurance?
Simply put, title insurance is a form of insurance that protects you as well as your lender from any claims or legal fees that could potentially arise if any issues develop regarding ownership of the property. In other words, if it turns out that the title search missed some important information and someone actually does have a claim to your property, title insurance will protect both you and the mortgage lender.
What are the Different Types of Title Insurance?
There are actually two different types of title insurance that can be obtained when purchasing a property: owner’s title insurance and lender’s title insurance.
Owner’s title insurance protects you, the owner, if title issues should arise. Lender’s title insurance, on the other hand, protects the mortgage company if a dispute arises. In other words, it ensures the mortgage lender still receives the money that it is owed even if the property turns out to be owned by someone else.
As the person or company borrowing the money, you will be responsible for paying for the lender’s title insurance when you close on the property that you are purchasing. This will be something that is required by the lender as a part of the loan process. Whether or not you choose to purchase title insurance for yourself is up to you, but is certainly a good idea. If you have title insurance coverage for yourself and someone proves to be the rightful owner of the property, the insurance will not stop you from losing the property. It will, however, ensure that you are compensated for the value of the property.
To learn more, contact Coal Creek today!