What is Title Insurance?

What is Title Insurance?

Imagine This

It's the first morning after you've purchased your new home. There are boxes strewn around the house and filling up the garage. You know that there are a million things to be done, but you lay in bed for one more minute as you enjoy the feeling of having this home for your own. Then there's a knock on the door. "It must be a kind neighbor that has come to welcome me to the neighborhood with cookies" you think. Instead, when you open the front door, you are confronted by someone with a rather unwelcoming expression and an official looking document that they hand you after you've identify yourself. 



Worst Housewarming Gift Ever

The paper could say any number of things. It could tell you that there was a mortgage on your new house from the previous owner and it was never paid off. It might say that a long time ago before the previous owner bought the house, the land was actually willed from a farmer to his grandson who has only just recently showed up to claim his inheritance. It might be a notice of a judgement against the property in favor of a contractor who replaced a broken window that was discovered in your home inspection. In a panic, you call your Realtor from West Real Estate Group and tell him how your morning has just been ruined.

Title Insurance, Sweet Title Insurance

That's when he reminds you that you've read this. You have Title Insurance to take care of these types of things just like you have Homeowner's Insurance to take care of a fire that burns down your house.

The first step in the Title Insurance process is a thorough search through the public records for any liens, judgments, or other things that could cause you a headache later on. The title company puts all of their findings into a document called a Title Commitment. There can actually be several drafts leading up to closing as issues are resolved and then removed from the Title Commitment. By the time you see your first draft, you can rest assured that your agent has already looked it over and has started to address any issues with the title company. This could involve collecting additional information about you or the property. Your agent will discuss any of these issues and let you know what is being done to resolve them. However, you should review the Title Commitment yourself. Your agent will be able to answer certain questions, but others he will have to direct back to the title company that produced the report as they are the real title experts.

Just as there are different types of Auto Insurance, there are different types of Title Insurance that cover various situations. The Escrow Officer listed on your Title Commitment will be happy to discuss your options and make sure you have the proper coverage.

Probably the best news about Title Insurance is that it is just a one time premium paid at closing. Certain types of Title Insurance are typically paid for by the seller and other types are commonly buyer costs. All of these expenses will be spelled out for you in detail of course.

On a final note, Title Insurance is entirely different than Mortgage Insurance. For more information about Mortgage Insurance, it is best to speak with a competent lender.

Good Morning

With your mind at ease, you forward the paper to your West Real Estate Group agent and get down to looking through your boxes for the coffee maker. It's going to be a long day of unpacking, and you're going to need the caffeine boost!