Closing costs are a pretty big deal. When you have to spend an additional ten thousand dollars or more on a home on closing costs, it is certainly very tempting to opt out of as many additional costs and fees as possible.
But title insurance is one of those options that can save you a lot of headaches and money on the back end. Many first-time home buyers find themselves wondering if they really need title insurance and if foregoing this added expense is a wise choice.
If you’ve found yourself weighing the pros and cons of obtaining title insurance, here are some reasons why homeowners need it.
What is Title Insurance?
Sunnyside Title Insurance is the protection both buyer and lender need to protect them from the losses that are associated with title defects. Real estate transactions must have a clear title in order to finalize. Any reputable title company will do the proper research on a piece of property before issuing a title.
Title searches are conducted to ensure that there are no liens, claims, erroneous surveys or code violations associated with the property. Title insurance protects things that occurred in the past that have nothing to do with you, the homeowner or home buyer. It saves you both time and money. With insurance, you can put your worries about title defects and all of the research and corrections that will need to be made out of your mind.
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Why Homeowners Need Title Insurance
As already mentioned, closing costs are in addition to the sale price of the home. And most home buyers are grateful for any optional costs they can opt out of; however, title insurance shouldn’t be one that buyers opt out of. Homeowners need this insurance to safeguard them from any previous owner’s mistakes, code violations and tax issues.
Without insurance, homeowners are leaving themselves vulnerable to any and all title defects. That means that if any unpaid property taxes are discovered, then the current homeowner will be financially responsible for paying the debt. Code violations may result in having to spring for unplanned renovations or demolitions.
Types of Title Insurance
There are two types of title insurance. Lender’s title insurance and owner’s title insurance. They’re both the same thing, but one protects the mortgage company’s interests and the other protects the home buyer’s interests.
Lenders require it to protect them from unrecorded liens and access rights, as well as other defects they could be responsible for. Lender’s insurance typically covers defects up to the mortgage amount. Homeowners should purchase the owner’s insurance to protect themselves and their investment from title defects. The owner’s policy will protect the homeowners for as long as they own the property or have an interest in the property.
If the lenders require home buyers to purchase lender’s title insurance to protect their investment, it’s in your best interest to do the same. Title searches are not infallible, and the information can be buried so deep that someone who’s searching misses a defect. Owner’s title insurance pricing will vary according to your state, the home price and the provider you choose.