Real estate has always been considered a person’s most valuable possession. It is so basic a form of wealth that many special laws have been enacted to protect ownership of the land and the buildings on it.
What Could Go Wrong?
- Liens on property
- Judgments against seller
- Garnishments against buyer
- Property line disputes
The Ins and Outs of Title Insurance
Even if your title search comes up completely clean, getting title insurance is a great way to help you sleep at night!
Even if you’re dealing with a great title company, there’s always a chance that something was missed during the search. For example, a long-lost heir could pop out of the woodwork and claim ownership to your home or business. Or, you may discover down the road that the records examined during your title search were full of mistakes – or, even worse, forged!
By getting a title policy, you can make sure that any problems that pop up will be taken care of — both in terms of money and legal issues. If you need to hire a lawyer or pay off an old lien, your title insurance will foot the bill. If the worst happens and you lose your home in court, your title policy will reimburse you for the equity you’ve built. Luckily, you’ll have this “safety net” for as long as you or your heirs own the home or business!
But if you think that getting title insurance means paying expensive premiums every month, think again. A title policy comes with a one-time fee that you pay at closing. The cost will depend on your specific title insurance agency and your specific part of the country (many states actually have price regulations for these policies).
Sounds like a good deal, right?
Well, we’re not done yet…
The title insurance we’ve talked about is technically called an “Owner’s Policy.” If you plan to get a mortgage to pay for your home or business, you’ll likely also have to get what’s called a “Loan Policy.”
What does that mean?
A loan policy is title insurance for lenders. After all, they’re taking a financial risk on your home or business, too! So, you’ll have to foot the bill for a title policy that protects your lender in case anything ever goes wrong.
Like your owner’s policy, your loan policy is a one-time fee (unless you refinance and work with a different lender; then you’ll have to get a new policy). The cost will be based on how big your mortgage is. The benefits of your loan policy will get smaller over time, as you pay off more of your mortgage. Once your mortgage is completely paid off, your loan policy will expire.
Luckily, a good title insurance agency will be able to sell you both types of policies. This way, you’ll be able to make the process as efficient as possible.
But how do you find the right title insurance agency?
Don’t go strictly on price (after all, there may be price regulations in your state!). Instead, look for companies that seem stable enough to be there for you if you need them 15 or 20 years down the road. After all, you never know what the future holds!