Title Insurance
If you are planning to purchase a home or in the process of purchase a home you may have heard something called title insurance.
Title insurance is NOT the same as homeowners insurance. Homeowners insurance is a protection you buy for events that may happen in the future. If you’re buying coverage for potential title problems in the past. Title insurance insures your title while homeowners insurance insures your home and your personal possessions.
the title insurance protects you, the buyer, if the person who sold you the property didn’t have full rights to sell it to you resulting in claims from various defects that may exist in the title. Sharon, what is a defect? There are different types of defects but for example, it can include a person claiming ownership like an ex-partner or a co-inheritor. It could also include a court judgment resulted in a lien placed on the property. There are different types of defects.
Types:
There are 2 types of title insurance: lenders title insurance and owners insurance.
- The lender’s title insurance is the most common and it is mandatory and will be reflected at the end in your closing costs. Almost all lenders will require the borrower to purchase a lender’s title insurance policy to protect the lender. Again, a lender’s policy only protects the lender against loss.
- The owner’s title insurance is optional and will protect the buyer against defects in the title. The closing agent will initiate the insurance process when they received a fully executed purchase agreement. The cost of both title insurance will vary between states, the price of your home, and the provider you choose. The policy must be paid just once and it will be in effect as long as you hold title to the property. Usually, the buyer is the one paying for it but there are certain scenarios where the seller could pay for it. An example of this is when the seller put on writing that will select the title company.
Do You Need One?
If you are a borrower the bank will add it to you because is mandatory but remember that lenders one will only cover or protects the lender. The owner’s insurance it’s optional and is the one that protects you against issues or defects in the title. Even though is optional, you should consider adding it for your own protection. Why? Let me give you an example.
You, as a homebuyer, are looking for your dream home, only to find after closing, unpaid property taxes from the prior owner. Having no title insurance, the financial burden of this claim for back taxes rests solely with the buyer, meaning you. You will either pay the outstanding property taxes or risk losing the home.
Is It Worth Risking Not Buying An Owner’s Title Insurance?
Even if you are not financing the purchase of the property, you should still consider owners title insurance to protect yourself if there are issues with the title. The essence of insurance is to protect you from financial loss when the unexpected happens.
Don’t hesitate to contact me if you are interested to know more about the home buying process or to know how we can do a free virtual buyers/sellers consultation.
Also, If you are thinking about buying or selling in Miami, CLICK HERE or you can call me at 786-376-2398.
To know a little more about this wonderful city, I invite you to subscribe to my weekly recap NEWSLETTER. Every week I publish interesting information about Miami, FL and other things that will be very useful for you.
Subscribe to my YouTube Channel: SUBSCRIBE!
Sharon Colón
Your Favorite Real Estate Agent in Miami
Home Miami Realtors
786-376-2398
[email protected]
www.sharoncolonre.com