Title Insurance: FAQ

Anyone who takes out a mortgage to buy a home or property is required to purchase title insurance. But few know what it really is or why they need it. Here are some Frequently Asked Questions about title insurance.

What is title insurance?

Title insurance is protection against loss which arises from problems with the title. Now as dull and obvious as this sounds, it's quite important to understand the different problems that can arise. Before you bought your home and land, there were likely several ownership changes that took place.

Now suppose one of these owners failed to pay real estate taxes. Unfortunately, the responsibility falls upon the current owner of the property. Title insurance will cover claims and legal fees up to the amount of the mortgage loan. Other types of claims that could arise are Contractor Liens, forged signatures, unresolved ownership claims, and new cliams of interest from the relatives of previous owners.

Is title insurance required?

If you purchase a home using a mortgage, then title insurance is required. Lenders will protect their investment up to the amount of the loan. While this covers the Lender, it is you who pays the premium.

How long am I protected?

Title insurance lasts the duration of the mortgage loan. When the loan is paid off, the insurance is gone. Should you decide to refinance or take out a second mortgage you would in all likelihood be required to again purchase title insurance.

In what ways does title insurance protect me?

While title insurance protects the lender, it doesn't protect the homeowner's equity in the property. But it does allow for a clean slate should you opt to sell the property.

Can I find title insurance on my own?

While most buyers concern themselves with the mortgage loan and home to be purchased, they tend to let the professionals (real estate agent, attorney) direct them to a title search company. In some cases, these people will receive kickbacks for getting clients into certain companies. Buyers are permitted to find their own title search and in some cases are better served in doing so.

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