Home Title Insurance - What is it, and Why is it Necessary?
Home buyers understand the importance of purchasing a comprehensive home insurance plan.
In the event of damages caused by unforeseen natural disasters, flooding or fires, home owners feel safe knowing their insurance plans will protect them financially.
Home title insurance works in a similar way, protecting home owners from legal attacks and ownership disputes on their new home's deed.
Although title insurance transactions are often wrapped up in closing services and handled by real estate agents, property searches and insurance plans are an essential part of every residential real estate transaction.
Home buyers have the right to choose their own insurance provider, and understanding why insurance is necessary helps property buyers make more informed and possibly more cost-effective decisions.
What is home title insurance? Unlike home insurance, which protects home owners against unforeseen future disasters, home title insurance protects home owners against unknown errors or problems with their land's title which may have happened in the past.
Like home insurance, purchasing insurance requires a thorough investigation of the home's land title, also known as a "property search", or "land title search".
Home insurance companies performing residential property searches thoroughly investigate the land title's chain of ownership.
One out of every three Michigan property searches reveal problems which could result in lawsuits or financial losses for the owner later on.
Common problems may include one or more of the following: Inaccurate records.
Sometimes real estate ownership is not legally transferred by a previous owner, but erroneous title records can also be caused by simple clerical errors.
Government liens due to unpaid taxes.
New property owners are financially responsible for any liens associated with their home's title, even if they were not privy to their existence.
Other liens.
These could include unresolved mortgages, mechanic's liens or preexisting leases.
The property search serves not only to uncover hidden problems or ownership conflicts with the home's land title, but it also works to resolve these issues before the sale closes.
Home title companies are staffed with insurance underwriters, attorneys and professionals who work behind the scenes to fix title discrepancies in order to give the real estate a "good opinion".
Once a home's title is deemed to be in "good standing", an insurance policy can be issued.
How Does Home Title Insurance Protect Me? The protection home title insurance offers to home buyers is largely preemptive.
By uncovering and resolving all preexisting title problems, agencies ensure that no future lawsuits or problems will occur.
Residential insurance does, however, also offer coverage against future lawsuits and financial losses.
In the event that a lawsuit attacking the home buyer's residential land title, the insurance would cover the cost of legal defense and, in most cases, the cost of any financial loss as well.
What is the Cost of Home Title Insurance? Typically included in overall closing costs.
Costs usually range from 3-5% of the cost of the total mortgage amount.
Because agencies may need to perform extra legwork to resolve problems on the title, costs tend to fluctuate from transaction to transaction.
In the event of damages caused by unforeseen natural disasters, flooding or fires, home owners feel safe knowing their insurance plans will protect them financially.
Home title insurance works in a similar way, protecting home owners from legal attacks and ownership disputes on their new home's deed.
Although title insurance transactions are often wrapped up in closing services and handled by real estate agents, property searches and insurance plans are an essential part of every residential real estate transaction.
Home buyers have the right to choose their own insurance provider, and understanding why insurance is necessary helps property buyers make more informed and possibly more cost-effective decisions.
What is home title insurance? Unlike home insurance, which protects home owners against unforeseen future disasters, home title insurance protects home owners against unknown errors or problems with their land's title which may have happened in the past.
Like home insurance, purchasing insurance requires a thorough investigation of the home's land title, also known as a "property search", or "land title search".
Home insurance companies performing residential property searches thoroughly investigate the land title's chain of ownership.
One out of every three Michigan property searches reveal problems which could result in lawsuits or financial losses for the owner later on.
Common problems may include one or more of the following: Inaccurate records.
Sometimes real estate ownership is not legally transferred by a previous owner, but erroneous title records can also be caused by simple clerical errors.
Government liens due to unpaid taxes.
New property owners are financially responsible for any liens associated with their home's title, even if they were not privy to their existence.
Other liens.
These could include unresolved mortgages, mechanic's liens or preexisting leases.
The property search serves not only to uncover hidden problems or ownership conflicts with the home's land title, but it also works to resolve these issues before the sale closes.
Home title companies are staffed with insurance underwriters, attorneys and professionals who work behind the scenes to fix title discrepancies in order to give the real estate a "good opinion".
Once a home's title is deemed to be in "good standing", an insurance policy can be issued.
How Does Home Title Insurance Protect Me? The protection home title insurance offers to home buyers is largely preemptive.
By uncovering and resolving all preexisting title problems, agencies ensure that no future lawsuits or problems will occur.
Residential insurance does, however, also offer coverage against future lawsuits and financial losses.
In the event that a lawsuit attacking the home buyer's residential land title, the insurance would cover the cost of legal defense and, in most cases, the cost of any financial loss as well.
What is the Cost of Home Title Insurance? Typically included in overall closing costs.
Costs usually range from 3-5% of the cost of the total mortgage amount.
Because agencies may need to perform extra legwork to resolve problems on the title, costs tend to fluctuate from transaction to transaction.
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