Purchasing a new home is among life's most satisfying achievements. Ensuring the security of your property ownership rights can be equally fulfilling. While on the journey to acquiring your dream home, you'll come across two words that may not have previously held much significance for you – title insurance.
Like other aspects of the home-buying process, understanding title insurance can be complex. To add to the complexity, there are often misconceptions surrounding this topic that can prevent home buyers from realizing its significance. To provide you with a clearer understanding of what title insurance entails and how it safeguards your property rights, we will address a few common misunderstandings.
"Title Insurance Is Not Worth the Expense"
In contrast to most insurance policies, title insurance does not involve monthly or yearly premiums. It is a one-time expense incurred at the closing when you buy or refinance real estate. The purchase price of your home determines the single premium for an owner's title policy and represents only a tiny fraction of your closing costs. This coverage remains in effect for as long as you and your heirs own the property. Obtaining an owner's title insurance policy is a reasonably priced investment when considering the benefits relative to the cost.
"There is only 1 type of title insurance"
Many people assume only one type of title insurance is available, but there are actually two: an owner's policy and a loan policy. An owner's policy is designed to safeguard you, the property owner, if a covered title defect affects your property ownership rights. When obtaining a mortgage loan for your home purchase, your lender will typically require you to get a loan policy, also known as a lender's policy. This policy protects the lender's interest in the property until the mortgage loan gets fully paid off. It's important to note that the loan policy does not provide any coverage for the homeowner.
Within the owner's policy, you can choose enhanced coverage. The standard range offers protection against financial loss and associated legal expenses arising from common title defects that occurred before the date of the title insurance policy. Enhanced coverage goes a step further, encompassing all the standard protections and adding extra layers of security for maximum assurance. Some of these additional coverages even protect against potential issues that may arise after the date of the policy.
"You do not need Title Insurance if you have homeowner’s insurance"
Some people may think that these two types of insurance are very similar or one in the same. Although both are related to a home purchase, they differ vastly. Title insurance protects a buyer's ownership rights and a lender's financial stake. Owner's title insurance protects your right to own, use, enjoy, and sell your property at will. In contrast, homeowner's insurance is a policy that provides coverage against potential losses or damage to the structure of your home or its contents resulting from insurable incidents.
“Can’t I just get a title search and waive title insurance”
The title search is the first step in the closing process and a standard search will search back up to 60 years to identify title encumbrances, easements, liens and all relevant information pertaining to the property which includes the chain of title, deeds, mortgages, judgements, bankruptcies and other factors affecting title to the property. However certain things may not have been uncovered that affect the title and your ownership to the property. This is where a title insurance policy comes into play and is crucial for any homeowner in case these hidden defects pop up. The title search alone will not fully protect your property rights.
Conestoga Title Insurance
Conestoga Title Insurance Co., marking its fiftieth year in operation, is a regional provider of title insurance underwriting services. Our company, established in 1973 and based in Lancaster, Pennsylvania, specializes in offering extensive title insurance solutions. We work with a network of exceptionally skilled and experienced independent agents and approved attorneys to provide these services. For more information on how title insurance safeguards your most significant investment, please get in touch with us at 800-732-3555 or complete our online form.