A Quick Explanation of Title Insurance

At Energy Smart New Homes we love helping first time homebuyers into homes. And that’s because new homeowners face a lot of hurdles and have to learn many new things during the process, and we love making that process easier to understand for them and for them to get through. One of the things that new homeowners have to do is learn numerous new, and confusing terms. Terms like “title insurance”. It seems like around every corner there is a new type of insurance. So, what does title insurance even relate to and is it a term that first time homebuyers should be aware of?

Basically, title insurance is a type of insurance that protects homeowners and lenders against financial losses that may occur as a result of disputes over the ownership of a property. When you buy a home, you receive a title to the property, which gives you legal ownership of the property. However, there can be issues with the title, such as errors or omissions in public records, undisclosed heirs or liens, or fraud. These issues can cause problems in the future, and that's where title insurance comes in.

Title insurance is a one-time fee that is paid at the time of closing. It protects the buyer and the lender from any financial losses that may result from defects in the title. The policy is valid for as long as you own the property, and it covers any defects that were present at the time the policy was issued.

There are two types of title insurance: owner's title insurance and lender's title insurance. Owner's title insurance protects the homeowner, while lender's title insurance protects the lender. In most cases, the buyer is responsible for purchasing both types of insurance.

The process of obtaining title insurance typically involves a title search, which is conducted by a title company or attorney. The title search is used to identify any issues or defects in the title, such as liens, unpaid taxes, or judgments. The title company will then work to resolve these issues before the policy is issued.

In addition to protecting homeowners and lenders from financial losses, title insurance can also provide peace of mind. Knowing that you have a clear title to your property can give you confidence in your investment and allow you to enjoy your home without worrying about potential legal issues.

It's important to note that title insurance is not the same as homeowners insurance. Homeowners insurance protects your home and personal property against damage or loss from events like fire, theft, and natural disasters. Title insurance, on the other hand, protects you from financial losses related to issues with the title to your property.

Hopefully this explanation has helped you get a better understanding of what title insurance is. But of course, if you have more questions, do not hesitate to speak to your real estate agent about them. Don’t let confusion rob you of the joy that is home buying! It should be a fun and exciting time.

By Energy Smart New Homes 5-23-2023