How title Insurance Protects Your Home
Your offer to purchase a home has been accepted by the seller. Has the seller declared all liens and issues in regard to the property deed? Title search and insurance are the vehicles to protect your home purchase and possible claims against your new home.Title insurance is usually insured for an amount equal to the mortgage loan. Title insurance is primarily for the protection of the mortgage lender and lasts until your mortgage is paid. Title insurance is paid by the mortgagee and this insurance doesn’t grant any protection to the home owner. The mortgage company wants to ensure that during the span of the mortgage they will be financially protected.
What is title insurance?
Title insurance is a special type of insurance known as indemnity insurance. Title insurance is required by mortgage lenders to cover any possible mortgage liens or defects in title on the property. The title or deed itself will be shielded by the insurance policy against loss due to any liens. The insurance value is at least the mortgage loan balance.Title insurance protects the lender from any possible claims of ownership while they are still owed money for the property. There are other special insurance policies that can be purchased to cover the owner’s possible loss.The title search.Your real estate attorney will order a title search, title insurance and a survey of the property. The title search and insurance are transactions performed at the bequest of the buyer’s attorney to ensure and investigate the history and possible easements or issues with the property.
The title search is a report known as Abstract of Title. This report is sent to the attorney and mortgage lender for review. The Abstract of Title is a statement with the following information– a detailed land description, any mortgages, easements, encumbrances, current registered owner and a diagram of the property searched.Understand liens. Lenders are careful to ensure that no claims exist against the asset. Lenders need to secure the repayment of debt and require a title search to ensure that there is no property lien against the property. A property lien is an obligation put on the property to secure a debt. Any debts that are currently on the property must be settled before the mortgage company will approve and lend the money for the purchase of your home. Once the closing process is complete, the mortgage lender will be listed as a lien holder on the property until the mortgage is paid.
Home sweet home is a true expression when a title search and title insurance are in place. The title search is for the benefit of the buyer and mortgage lender. Title insurance is truly for the benefit of the mortgage lender. Buyers would be wise to inquire how much it would cost for similar coverage for their protection. Owning a home is expensive, maintenance is constant and securing your asset should be paramount in your financial planning.If the title search discovers liens that need to be cleared from the registry, make sure you get a finalized title search after any items were remediated to the Abstract of Title or corrected due to reporting error. Your attorney will follow up with all issues reported on the Abstract of Title and advise you of the status. In most cases, the title search comes back with positive clean statements. The title search and title insurance process is an easy one, moderated by your attorney.
