Home Buying: Title Insurance

The concept of title insurance can be very confusing. There are three characteristics that make up title insurance: (1) It protects ownership rights from both fraudulent claims against ownership and from mistakes made in earlier sales (mistakes in spelling of a name or inaccurate property description); (2) It is a one-time cost based on the sales price of the property; (3) there are both lender title policies (which protect the lender) and owner title policies (which protect the owner). Overall, title insurance can insure against devaluation or cloud on title that may occur because of incorrect information provided by the title company.

Five Things to Understand About Title Insurance

  1. It protects your ownership right to your home both from fraudulent claims against your ownership and from mistakes made in earlier sales, such as mistake in the spelling of a person’s name or an inaccurate description of the property
  2. It’s a one-time cost usually based on the price of the property
  3. It’s usually paid for by the sellers
  4. There are both lender title policies, which protect the lender, and owner title policies, which protect you. The lender will probably require a lender policy
  5. Discounts on premiums are sometimes available if the home has been bought within only a few years, since not as much work is required to check the title. Ask the title company if this discount is available