What is Title Insurance?

When purchasing a home, the new owners are not only buying the structure, but they are also purchasing the title to the property – which is the right to occupy and use the space.  That title could be contested based upon past rights and claims asserted by others, and these types of claims can infringe upon your purchase of the property or cause you to lose money.  Title Insurance helps to protect against those claims, through research and examination of previous ownerships.

Why do you need Title Insurance?

A home is usually the largest single investment any of us will every make.  Title Insurance protects against loss of value from hazards and defects that may exist in the title.  These hazards include fraud, forged signatures on deeds, unknown property heirs, liens, and documentation errors.  If you were uninsured and your right to title is challenged, you could lose significant money defending yourself or you could lose your home.  Your mortgage lender will require a loan policy of title insurance to protect their interest in the value of your property and a homeowner should purchase an owner’s policy for the very same reason.

How does Title Insurance protect against hazards?

An owner’s policy of title insurance requires the insurance provider to pay for defending against any lawsuit attacking your title as insured, and will either clear up title problems or pay the insured’s losses.  For a one-time premium generally paid at closing, an owner’s title insurance policy remains in effect as long as you, or your heirs, retain an interest in the property.

Why does your lender require Title Insurance during refinancing?

From the lender’s standpoint, a refinanced mortgage is actually a brand new mortgage – complete with the same risks that may have been preset originally.  During the refinance process, your original mortgage is paid off – and your existing lender’s title insurance policy is rendered null and void.  However, if you purchased an owner’s policy of title insurance at your original closing – that policy will remain in effect as long as you or your heirs own the property.