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first time home buyers

A mortgage is a very heavy responsibility, and on that will stay with you for the next couple decades. It’s important to make sure that as a purchaser all of your bases are covered. Forgetting small details, like neglecting to find title insurance, can throw a wrench in the purchasing process. It’s important to ensure the mortgage loan goes through without a hitch and nothing disrupts the sale. Here’s an explanation as to why a small, inexpensive detail like title insurance is so important when buying a home.

What is title insurance?

According to the Consumer Financial Protection Bureau, title insurance protects lenders from title issues. Every home’s title must be searched thoroughly before a purchase or sale is made. Sometimes, however, details slip through the cracks. In rare cases, property deeds from sellers prove to be falsified, there can be undiscovered liens on the property that affects its sale, or inheritance disputes can put your ownership in question. For these reasons, homeowners are required to have title insurance on their mortgaged property.

How is Title Insurance Used?

first time home buyers title insurance policies are designed to protect a bank’s investment, not your investment. If ownership of your property were to come into question, it is the bank’s responsibility to work with you to file an insurance claim that will pay off your mortgage loan and absolve you of responsibility for the mortgage payments. The bank holding your mortgage must make a claim against the insurance policy with your help. The insurance company would pay the bank for the loan amount on the property and you would walk away. There are ways that you can protect yourself from walking away empty-handed, though. Homeowners can protect their own interests with an expanded owner’s title insurance policy.

Why do you need lender’s title insurance?

Title insurance is the only thing protecting banks and homeowners from taking a huge loss in the event of an unforeseen circumstance that would make their home purchase invalid. Insurance companies and banks require a thorough title search to be performed before a mortgage loan contract can be signed. When the title search is complete, all parties are generally satisfied that the sale of the property is legally permissible. That isn’t always the case, though. If ownership of the property is challenged by a person with a legitimate legal claim, you will probably lose your home. Without title insurance, you would also lose all of your equity. You would walk away essentially penniless. If you buy title insurance, your insurance company will make it right with the lender.

If title insurance is designed to help banks, why don’t banks pay for their own insurance?

Lender’s title insurance is your legal responsibility. You cannot secure a mortgage loan without it. Lenders simply will not allow you to keep a mortgage with their companies without maintaining a policy throughout the life of your loan. It’s true that standard policies only protect lending institutions from title claims. You can, however, purchase your own owner’s title¬†insurance policy. Owner’s policies allow homeowners to walk away from a title claim with money in their pockets.

If purchasing a home is on the horizon, look into the price of securing a policy now. First time homebuyers are encouraged to contact us today for a quote on lender’s and owner’s title insurance.

Title Problems New Homeowners Can Run Into

Title Problems New Homeowners Can Run IntoTitle problems have a tendency of showing up during the title search and after the closing. This is the time that most homeowners would hope that their title insurance policy would help them in solving some of the problems they have. And subject to the policy terms, you can use your title insurance to get protection from the problems that might come to light after you have sealed the deal. It is very important to avoid the problems connected with the title before the closing. You can only understand the title problems if you have any idea of what a title may mean. The title, in simple terms, is evidence that shows that an owner is in full and lawful possession of a particular piece of property or real estate. Owning a deed to a property means owning the property.

Here are four undiscovered title problems that can cause new homeowners a difficult time.

Errors in Public Records

It is usually said that to err is human, but these mistakes can be very devastating when they particularly affect the rights of home ownership. Errors to do with filling or clerical could greatly affect the survey of the deed of your property and in turn, bring undue financial strain in a bid to fix them.

Illegal Deeds

Despite the fact that the chain of title on your property may look right, there are chances that a prior deed might have been done by either a minor, undocumented immigrant or an individual of unsound mind. Possibly, it could also have been made by a person who is reported to be single but is actually married in the real sense. Any of such situations may interfere with the enforceability of the previous deeds, and in turn, affects both the prior and present ownership.

Undiscovered Encumbrances

When it comes to taking an ownership of a particular home, three can be mostly referred to as a crowd. When buying the house, it could be unclear to you that another person may posses the claim to either a proportion or all of your property. This may occur as a result of a previous lien or mortgage, or other claims that are not financially related such as covenants or restrictions that places certain barriers to how the property should be used.

Undiscovered Wills

When the owner of a property passes on without a clearly prepared will or heir, the state may be forced to sell their assets. This may even include the home they have been living in. When you go ahead and buy such property, you immediately assume the rights of owning it, and therefore it becomes yours legally. However, an unexpected may happen even years later after you had taken up ownership of the house. When, for instance, the will of the deceased owner of the house comes to light, your rights to own the property may be in a stake.

These and most of other issues that are not covered in this article are mostly taken care of by the owner’s policy of the title insurance. When you purchase a home, your immediate responsibility should be to use a title insurance to protect that particular investment. To learn more, get in touch with us!