Protecting Your Home with Title Insurance
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The biggest investment you will make in your lifetime will likely be purchasing a home. So before you commit to the transaction, you want to be certain that the property's title is free of any other claims.
A title insurance company ensures that your new home won't surprise you with 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 company searches the property's title history. The title insurance 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 insurance 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 — This usually happens when someone who owned or even lived in the home before you claims to still hold an interest. In this case, the title insurance 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. Many other complicated problems define "Defective title" or "Clouded Title." The title insurance company will uncover these problems, or should they miss them, insure your loss up to the amount of the policy.
At F&T Mortgage, Inc. NMLS # 168839 (www.nmlsconsumeraccess.org), we answer questions about this process every day. Give us a call at 214-300-8756.