Whether you're purchasing a new or existing home, or refinancing, title insurance protects the title to your home against risks covered by the policy.
The Basics
There are two types of title insurance: the owner's policy and the lender's policy. The owner's policy protects your property rights as the homebuyer, whereas the lender's policy insures the financial investment of the bank or lender. Title insurance typically protects you against unknown defects that could cause financial loss.
Common Risks
Here are some examples of problems with title:
- Liens against the property that serve as security for the payment of an obligation (e.g. mortgage liens, judgment liens for unpaid court judgments, federal tax liens, state and local liens for failure to pay real estate taxes or assessments, mechanic's liens to secure payment for property improvements, or liens for recovery of child support payments).
- Easements that have been created by contract or arisen through use or adverse prescription (e.g. rights of way for utilities, rights acquired by neighbors because of a fence encroachment).
- Building or use restrictions contained in recorded plats, agreements or deeds.
- Claims arising out of bankruptcy.
These are just some of the many reasons why getting owner's title insurance is crucial when buying or refinancing a home. It gives you peace of mind that your property rights are protected.
Refinancing?
When you refinance, you are obtaining a new loan, even if you stay with your original lender. Lenders will usually require a new title search and lender's policy to protect their investment in the property. Fortunately, homeowners don't need to purchase a new owner's policy—the one you bought at closing is good for as long as you or your family own the property.
Enduring Value
Owner's title insurance is a low, one-time fee based on the value of your home. With a home being one of the largest investments you'll ever make, it's clear why getting owner's title insurance is such a smart way to give yourself peace of mind.
More Homebuyer Tips & Information
The American Land Title Association helps educate homebuyers like you about title insurance so you can protect your property rights. Check out www.homeclosing101.org to learn more about title insurance and the home closing process.
*This advertising offers a brief description of insurance coverages, products and services and is meant for informational purposes only. Actual coverages may vary by state or locality. You may not be eligible for all of the insurance products, coverages or services described in this advertising. For exact terms, conditions, exclusions, and limitations, please contact an Old Republic Title representative.
