There are many required fees involved when buying a home so when a fee is optional it can be tempting to save a few dollars. At a cost of about $3 to $4 per thousand of purchased price policies are not inexpensive but can seem like pennies if you find that you need it. Costs can vary substantially depending on the policy coverage.
What is Title Insurance?
Title insurance covers the homeowner from financial losses in the event of a hidden issue or defect with the property title.
- Title Insurance is a one-time payment
- Policies cover homeowners and their heirs for as long as they own their home.
- Lenders may require you to purchase title insurance lenders policy, however, owners' policies are optional.
Examples of Issues Title Insurance can cover
- Erroneous title property descriptions
- Fixing unpermitted work done prior to the purchase of the property
- Faulty foreclosures
- Deed errors
- Recording errors
- Incorrect boundary descriptions
- Building encroachments
- Adverse possession or prescriptive easements
- Pre-existing violations of subdivision, zoning laws, restrictive covenants
Policies can vary greatly in cost and what is covered. Here are a couple of items to look out for.
- Lenders require buyers to purchase title insurance to cover to protect the lender, you still need to purchase a policy that covers yourself.
- You may be eligible for a substantial discount if you purchase both lender and owner's policy when closing.
- Title insurance can only be purchased by an approved title insurance agent.
- Make sure your policy includes inflation so that the policy covers the market value of your home, not just the purchase price.
Why You Should Get Title Insurance
You may never need title insurance but like any insurance, you don’t need it until you need it. Title issues can take a lot of time to resolve, hold up closings and be very costly. As tempting as it is to pass on purchasing it, if an issue does arise you will be more than glad you didn’t.