Why Do I Need Title Insurance?
As part of the preparation for settling on your new home you will need to protect your new investment with title insurance.
With the help of your lender or realtor, you will need to arrange for an attorney authorized to issue title insurance, such as Midstate Abstract Company, to complete a title search of the property you are purchasing. This search will provide the information needed to convey clear title to you as the new owner. As part of obtaining the loan, your lender will require that you purchase title insurance with lender’s coverage for their protection as well as owner’s coverage for your protection.
- Lender’s Coverage – Your lender’s title insurance policy protects their investment, but not yours. The lender’s policy is limited to the loan amount and decreases as the loan is paid off.
- Owner’s Coverage – Your title insurance on your new property has no ending date. It insures you and your heirs against defects in title for as long as you have an interest in the property. Your policy coverage is the same amount as the purchase price of the property.
What is a Title Search or Abstract?
The title search or abstract includes a search of the public records in the courthouse of the county where your property is situated for previous deeds, mortgages, liens, encumbrances, taxes, assessments, etc found on your property. What the search reveals will determine the insurability of the property.
After the search is conducted any title problems are cleared such as providing for the payment of all liens and taxes to be paid at the time of settlement by the current property owner. The attorney is then able to close the transaction, record the appropriate documents at the courthouse (typically the deed and mortgage) and transfer title to you.
What Does Title Insurance Provide?
For a one-time premium, based on the purchase price of your new home, title insurance provides you and your lender with the peace of mind that good title is being conveyed. Your title insurance will pay to defend many types of attacks on the title and pay valid claims as long as you have an interest in the property. Both the lender’s coverage and the buyer’s coverage are provided for in this one-time premium so long as the policies are issued at the same time. Your lender may require additional endorsements on their coverage which is in addition to the one-time premium and paid at settlement.