Buying a home is a huge investment. It may even be the biggest investment you have made thus far. And, as with anything you value, you want to protect it.
How do you do this? With title insurance.
Though, not all title insurance policies are created equal. There are two different types available to ensure that the rights to the title are protected for anyone who has an interest in it.
Let’s take a closer look.
Understanding Title Insurance
Title insurance protects your property rights from title issues that happened before you took ownership.
Your title team will do a title search before offering you a title insurance policy. This deep dive into the property’s history will allow them to see whether or not any issues need to be addressed before the title can be cleared to close.
Unfortunately, title issues can get missed during this search, for one reason or another. And when that happens, they don’t just disappear. They can arise at any time you own the property. For instance, if a lien against the previous owner is attached to the property and doesn’t get released before the property changes hands it now becomes the new owner’s problem. This can put property rights in jeopardy.
As its name suggests, title insurance is a layer of protection that deals with these issues as they arise. It reduces your money, time, and headaches spent trying to fight any claims that come up.
Types of Title Insurance
There are two main types of title insurance – an owner’s policy and a lender’s policy. Each one of these title insurance policies is put in place to reduce risk and protect rights. The difference is in who they protect.
Owner’s Title Insurance
An owner’s title insurance policy protects the rights of the owner. It is purchased at the closing and it will remain in place for as long as the owner has an interest in the property. This includes the owner’s heirs, too.
Different types of policies fall under the owner’s title insurance, including an enhanced title insurance policy and a standard policy. It is always a good idea to talk to a title expert at your title company to discuss your options and decide which is the best coverage for your new property.
Lenders Title Insurance
Lender’s title insurance is another type of title insurance that protects the lender.
When agreeing to give you a loan to buy your property, they are taking a risk. It does not matter how good the underwriting process went, anytime a bank hands over a large sum of money, there is risk involved.
Lienholders want to remain in the first lien position so that they will have a secured claim should something go awry. As a result, they will usually require you to purchase a lender’s title insurance policy so that they are protected.
It is important to know that an owner’s title insurance policy will not protect the lender just as a lender’s title insurance policy will not protect the owner. To ensure that everyone is protected, you will need to have both types of title insurance.
Title Insurance at Kendall Title
At Kendall Title, we live title insurance every single day – but we understand that you do not. So, as we work together to get you from the contract through the closing without any added stress, we will discuss with you everything you need to know about title insurance so that you can feel confident in your new home for years to come.
To learn more – or to get started – contact us today at (904) 230-1063.
