No one likes to think of all of the things that could potentially go wrong in a transaction; that’s why we have insurance! We’re used to paying for car insurance, health insurance, and even homeowner’s insurance, but then your real estate or lender mentions title insurance? You’re tired of paying for insurance, and on your title? You don’t know what could possibly go wrong with your title. If you’re buying a property with a mortgage loan, then you have to have title insurance, but here are three reasons why that’s not a bad thing.
Title insurance covers legal fees, court costs, and any other expenses that can result from title disputes. Without it, you pay all of that out of pocket.
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You’re buying an older house.
Properties have histories. When you’re looking to buy a property, you’re probably not thinking about what might have happened 100 years back! You’re just thinking about your future in the house. A title insurance policy protects your home, and the land it’s on, from any “title defects” like liens or previous claims on the property.
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You like to be prepared.
In most cases, problems with a title are discovered in the title search by the lender, so title insurance may not seem like it’s needed. In the struggling housing market, however, fraud is becoming increasingly prevalent. The cost of title insurance is much lower than the potential cost of covering a bad title. If you’re torn, break out a title insurance calculator and do the math.
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You’re refinancing.
Your title insurance is typically tied to your mortgage, not your property. If you’re refinancing, then you’ve probably owned your house for at least a few years. Common title defects typically appear before this point, so you may try to skate by without a new title insurance policy, but you can never be completely sure that you won’t discover a title defect.
Even if your title is completely clear, you’re not necessarily safe. You can have problems come up at any time. For example, divorce can cause a disputed title. It’s better to be safe, and who knows—when you’re refinancing, you may even get a better title insurance rate! Overall, the cost of title insurance may not seem worth it in most situations, but if you have to make a claim, you’ll be glad you have it.
