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The Importance of Title Insurance

Out of all the components that go into becoming a homebuyer, title insurance is not the most exciting. Determining which area to live in and how to decorate the house are areas that are much more thrilling for the family. However, title insurance is very important in the home buying process. When you purchase a home, you become its legal owner. The title of the property will go under your name and will be processed through the public land records. Then, typically as you close on the home, you should buy title insurance to protect yourself as the homeowner.

When settling, a title search will be completed. The search is done to check on the history of your property. A settlement company will look for discrepancies in: wills, property taxes, contractors, courthouse documents, and fraudulent claims all related to the title of your property. Generally, lenders require these searches and settlement companies conduct them.

When you purchase a home, you buy lender’s title insurance. This is used to cover any problems the lender may have with the title, including court fees or research on claims. An optional insurance you can purchase in addition to lender’s title insurance is called owner’s title insurance. Depending on the area that you live in, either the seller or the buyer typically pays for this insurance. If you are in a situation where the insurance company fails to win a case over your property’s title, you will not be protected. Any continued fights about your title are going to have to be paid by you.

There are two types of title insurance: basic and enhanced. The insurance is paid in one premium at the closing of your home. In California, there is no standard insurance premium. Therefore, looking around for different title insurance premiums will provide you with better deals. Talk to experts in the field: realtors and lenders. And talk to your friends and family. Make sure the policy you choose will cover your particular situation. The majority of homeowners will never actually have to use their title insurance. But without it, you risk finding yourself in a very tricky and expensive situation.

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