Buying a home is one of the most exciting and gratifying experiences out there. During the process of purchasing your new home, you might come across a couple of words that you’ve probably not given much thought to—title insurance.
While the home buying process can already be overwhelming, when you throw escrow and title insurance into the mix, it can become quite confusing. To further complicate things, there are numerous misconceptions about what title insurance is, and what it is for, which can keep new homebuyers from fully recognizing its importance.
To better understand how title insurance protects your property rights, let’s dispel common myths about title insurance:
Myth: Title Insurance Only Offers Minimal Protection
During the purchase of your home, you will receive the title to the property. The title is your legal right to ownership of that property. Early in the home buying process, a title search is conducted to review the history of the property and ensure that there aren’t any liens, title defects, claims, or other issues that might arise.
This is where title insurance comes in, essentially title insurance protects you in the event of a dispute over ownership, or a lien, and will cover the legal expenses incurred to resolve the dispute.
Have greater peace of mind: Is Title Insurance Required?
Myth: There is Only One Type of Title Insurance
There are two types of title insurance that you may purchase during the home buying process: an owner’s policy, and a loan policy.
The owner’s policy protects you, the property owner, against loss or damage if there is a covered title defect uncovered during the property title search. If you are using a mortgage loan to purchase your home, the mortgage lender may require you to purchase a loan policy or lender’s policy.
This title insurance policy protects the lender’s interests in the property until you have paid off the mortgage in full. Keep in mind, this loan policy provides no coverage to you, the homeowner.
Buying a home? Protect your property rights with title insurance from True Concept Title. Call us today for a consultation: 813-263-7168
Myth: Title Insurance Requires a Monthly or Annual Premium
Unlike most insurance policies, there is no monthly or annual premium with title insurance. Title insurance is a one-time cost that you pay at closing when you purchase your dream home or refinance a property.
Learn More: What Does a Title Company Do?
Myth: Title Insurance is Expensive
Generally, the one-time premium that you pay for an owner’s title policy is based on the purchase price of your home and is a small percentage of your closing costs. Coverage from your title insurance policy is provided as long as you or any of your heirs own the property.
When you weigh the benefits compared to the costs, an owner’s title policy is really quite reasonable.
Buying a home can be overwhelming. Don’t worry! We’re here to help you through every step in the title insurance and escrow process. Protect the biggest purchase of your life with True Concept Title!
Myth: Paying with Cash Eliminates the Need for Title Insurance
An all-cash purchase will eliminate the need for a mortgage, thus eliminating the need for a lender’s title insurance policy.
However, an all-cash transaction does not eliminate the risks of unknown title defects. Ensuring that you have an owner’s title policy will protect you against the loss or damage of a covered title defect.
Myth: Homeowner’s Insurance and Title Insurance are the Same
Not true. Title insurance protects your right to ownership and your lender’s investment. A homeowner’s insurance policy protects your home against losses or damage to the structure of your home during a covered damaging event.
Myth: Home Buyers Do Not Get to Choose Their Title Company
Under the terms of the Real Estate Settlement Procedures Act (RESPA), you, the buyer have the right to choose the title company when the property is purchased with a federally regulated mortgage loan.
The seller of the property may not require you to purchase title insurance from a specific title company unless the seller is paying for both title insurance policies associated with the real estate transaction.
Myth: I’ll Never Use My Title Insurance
Not so fast. In recent years, the title industry spent around $615 million defending the property rights of homeowners due to covered title defects.
Whether or not you think that you will use it, it is wise to have it, because you never know what liens, claims, or titles might arise during your purchase, or further down the line.
Secure Your Property Purchase with True Concept Title
With so many myths and misconceptions about title insurance out there, it is crucial to find a title insurance company that you can trust during your home buying purchase.
We are nationally known as a professional, full-service title insurance and escrow company that will help ensure the security of your property rights. If you are looking for help with your real estate transactions and have any title insurance questions, call True Concept Title at 813-263-7168. We are truly committed to providing quality title and escrow services