Title Insurance Protects Your Investment
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Purchasing a home is probably the largest investment you will make in your lifetime. Before closing on the house, you will want to know that no individual or entity has a claim or lien to the property.
A title insurance company ensures that your new home doesn't carry encumbrances and other legal obstacles.
For a modest, one-time title insurance premium, you will receive continuous title insurance protection equal to the purchase price of the property or its current market value.
The title insurance company performs an extensive search on the property's title history. Through its research, the title company can almost always identify any title problems and have these problems cleared-up before you close on the property.
Real Estate law is extraordinarily complex. Title companies make sure that all the T's are crossed and all the I's are dotted so you don't end up with a clouded title and legal problems. Your title insurance owner's policy will describe the property and outline the limitations on your ownership. It will also set forth the title company's responsibilities should any claim covered by the policy terms arise. Typically your title insurance will protect you in the following cases:
- Contested title — Someone, usually a previous owner or occupant, claims they still own the property or have not given up their claim. In this case, the title company will defend your title at no expense to you.
- Defective title — This is a general term for a legal problem with the title that cannot be corrected and includes "contested title" above. Defects are rare, but they can be very difficult, making the property inaccessible, unbuildable, or unsaleable. Any number of other complex problems define "Defective title" or "Clouded Title." The title insurance policy will protect you from these errors if the title company misses them.
At F&T Mortgage, Inc. NMLS # 168839 (www.nmlsconsumeraccess.org), we answer questions about this process every day. Call us at 214-300-8756.