A Beginner’s Guide to Home Buyer’s Insurance

What is Title Insurance and Why You Need It

Why is title insurance important for home buyers? Anyone buying their first home may question the purpose of title insurance for home buyers and lenders.

Before signing the documents or moving forward with buying a home, it is important to acquire an understanding about title insurance. Understanding the purpose and process of issuing your title insurance policy will help you to attain a better closing experience.

Get in the know about your home buyer’s title insurance policy.

What is title insurance?

The issuance of title insurance protects the home buyer and lender from losses as the result of the prior transfers of real property. For some, title insurance is an unfamiliar term that comes up for the first time after deciding to buy a home. At this time, a home buyer may ask, “what exactly is title insurance?” Your title insurance policy protects your claim to the title of the home you plan to purchase. Before the deed is signed over to your name, an underwriter is responsible for evaluating the former chain of ownership of the home and assuring that you are acquiring clear title as contemplated by the deed.

Why do you need title insurance?

There are plenty of issues that can exclude you from your rightful claim to the title when it comes to purchasing real estate. Real property is often used as collateral to settle lawsuits and disputes in court, which puts a lien on the home and restricts the transfer of the deed. In addition, hidden heirs or unpaid property taxes may also be attached to the property. A close evaluation of the potential property’s chain of title must be conducted to uncover any inconsistencies between the title and deed.

What do you want to avoid with your title policy?

An underwriter must conduct research before issuing a title insurance policy. This protects the home buyer from defects in the title, encumbrances, liens, restrictions, undisclosed heirs, unpaid property taxes, and any additional details on the records. An example of a title defect includes a lien, or a right to keep possession of property belonging to another person until a debt owed by that person is discharged. An encumbrance is a burden to the property title that does not restrict transfer but grants use of the property to someone who is not the owner. Sometimes an encumbrance is extended for public access to a road through the property. A deed restriction may limit the use or permitted activities on a property, such as those found in riparian rights for outlining access and use rights to bodies of water.

Your title insurance company should be able to determine if there are any unpaid property taxes, undisclosed heirs, and/or any other issues with the property that keep you from obtaining a “clear title”. A clear title just means that your claim to the deed is clear from any defects that limit or restrict the transfer/use of real property.

Are you ready to hold the “clear title” to your dream home?

Then go with a title insurance company you can trust. BNTC has the real estate and legal experts needed to achieve a smooth closing process. Contact us today.