Title Insurance.

If you've purchased a home before, you're probably familiar with the benefits and procedures of title insurance. But if this is your first home, you may wonder, "Why do I need another insurance policy? It's just one more bill to pay."

The answer is simple: The purchase of a home is most likely one of the most expensive and important purchases you will ever make. You, and your mortgage lender, want to make sure that the property is indeed yours, and that no individual or government entity has any right, lien or claim to your property. Title insurance assures that any valid claim against your property will be borne by the title company.

Title insurance companies are in business to make sure your rights and interests to the property are clear, that transfer of title takes place efficiently and correctly and that your interests as a homebuyer are protected to the maximum degree.

Title companies issue two types of policies -- "Owner's," which covers you, the homebuyer, and "Lender's," which covers the lending institution, over the life of the loan. Both are issued at the time of purchase for a one-time premium.

The purpose of title insurance is to eliminate risks and prevent losses caused by defects in title that happened over past transactions. Before issuing a policy, the title company performs an extensive search to determine if anyone other than you has an interest in the property. Risks are examined and mitigated before property changes hands.

This risk elimination has benefits to both you, the homebuyer, and the title company: it minimizes the chances adverse claims might be raised, and by so doing reduces the number of claims that have to be defended or satisfied. This keeps costs down for the title company and your title premiums low.

Title problems can usually be found and cleared up prior to closing. However, if any claim is ever filed against your property once a title policy is issued, the title company will pay the legal fees involved in defense of your rights, as well as any losses arising from a valid claim. That protection is in effect as long as you or your heirs own the property, for a one-time premium paid at the time of purchase.

Article by CLTA