Like many aspects of buying a home for the first time, when you hear things such as “title insurance” and “title company”, you’ll likely be left with more questions that need to be answered. Additionally, you’ll likely be looking at your closing costs and see a somewhat significant line item attributed to the title on your new home. If you’re savvy or wanting to pinch pennies during the closing process, you may want to examine what a title is and what title insurance is.
In most cases, especially if you’re going through a lender, title insurance is necessary as it protects both you as the homeowner and the lender from anything weird happening. But what is a title and what is title insurance?
What is a Title Anyway?
A title on your home, much like the title on your vehicle, is proof or rightful ownership of a home or piece of property. Depending on whether or not you’re financing your home or buying it outright in cash will depend on whether or not you physically have possession of the title. In most cases, your lender will technically hold the title, but that’s beside the point.
A title proves that you rightfully own the home, and a clean title further proves that there are no outstanding liens, lawsuits, or other legal complications affiliated with the property. Therefore, title insurance protects you and the lender from any further legal action from potential lienholders, family members of former property owners, etc.
What is a Title Company or a Title Attorney?
In most cases, your lender will have a list of title companies or title lawyers they regularly work with for this aspect of your home transaction. Granted, you have the ability to choose your own title company if you would prefer. like, but using a title company that your lender has a pre-existing relationship with may expedite your closing process.
Title companies are either owned by Attorneys or may be part of a law firm that provides title services. It’s the job of both the Attorneys and title company to perform a deep dive into the public records to ensure that there aren’t any red flags associated with the property that could cause ownership issues in the future. This legal work is essential to protecting you and your lender against possible lienholders down the road.
What is Title Insurance and Should I Get it?
While you can trust that your title company or title Attorney will do their due diligence in digging through the public record to protect your property, there’s no guarantee that something from the past won’t come to light in the future. This is where title insurance comes into play. In most cases, you pay for title insurance one time upfront when you purchase the home.
Title insurance protects you from unknown heirs or lienholders from coming after you or your property in the future. If given a choice, you should absolutely get title insurance if it’s available. In most cases, especially when working with lenders, it will be necessary as part of your mortgage. For perspective, lenders will not be able to enforce your mortgage or the money behind it without title insurance of their own.
Do you have questions about the closing process of your home purchase? Perhaps you’re just looking to get into the mortgage market and get pre-qualified for a new home. No matter the case, Tidewater Mortgage Services has a team of Loan Professionals who can answer your questions and assist in getting you pre-qualified for a loan! Call today.
