Buying or selling a home can be both exciting and overwhelming. In the process, you’ve probably come across the term “title insurance.” Chances are you may be coming across a lot of new terminology such as title insurance, chain of title, closing, and more. A lot of the time Buyers, especially first time buyers, haven’t heard of title insurance until their realtor or perhaps attorney mentions how important this protection is for their investment. The American Land Title Association (ALTA) reports that 36% of all real estate transaction have a defect in title. That’s a pretty incredible amount! This means that both buyers and lenders need to take precautions to protect their investment.
There are two types of title insurance policies; a loan policy and an owner’s policy. The owner’s policy protects the homebuyer and the loan policy protects the lender. Most lenders will require a loan policy when they issue a you a mortgage or a loan secured by real estate. Title insurance is often required as part of the closing costs. This one-time premium is paid at closing. It covers research into public records to ensure that the title is free and clear, and ready for sale. For example, if you purchase a home and find out later that there are liens on the home, you’ll be glad you purchased an owner’s policy!
Read more from Land Title Guarantee here:
Land Title Guarantee Company – What is Title Insurance?
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