Home searching and home buying are two very different things. Home searching is exciting and whimsical, while home buying can seem intimidating and confusing. Many first-time homebuyers can become overwhelmed with all of the new jargon being thrown at them.
It’s important to ready yourself with knowledge of what is being presented to you – and one of the key terms to know and understand: title insurance.
A surprise to some – title insurance is not “just another fee” that you add on to your purchases. It actually protects both lender and buyer from many types of claims made against the title to a property – such as encumbrances and liens.
Another surprising factor – one out of every four residential real estate transactions has an issue with the title.
Essentially, title insurance is based on loss prevention. This means that a much larger percentage of the premium dollar is spent up front to prevent any title problems from occurring.
What do these costs cover, exactly?
Title insurance covers searching, identifying, and resolving title issues before closing to eliminate risks that could result in a future claim. The due diligence performed before the policy is issued aids in resolving any potential roadblocks.
Now that you are ready and informed with a title insurance definition, you can begin to feel more confident and secure throughout your transaction!