For many of us home purchase is a lifetime investment. For this reason we try to protect our financial future buying various types of insurance policies. We want to be covered from damages caused by natural calamities, like flood or hurricane, or be protected from catastrophes caused by humans. In both cases we need to buy homeowners insurance. Having done this, you can feel yourself protected and confident, but this isnt always the case. There are still some perils that can ruin your future and lead you to bankruptcy.
The risk appears to be more obvious when you are buying a house from original owners. It may turn out, that there are some hidden circumstances that can cost you a lot of money. For instance, a previously unknown heir may appear claiming his rights on the property, which may lead to huge financial troubles. In such a case you may be financially unprotected, unless you have purchased title insurance for your house.
Importance of title insurance cant be overestimated, though not too many people understand it well enough. Title insurance protects homeowners from loss when a third party claims its right on your property. To be more accurate, title insurance protects against issues arising from the transaction of the real estate you own or going to purchase. Unlike other insurance plans, premium for title insurance is paid just once.
The benefits from title insurance are vividly clear for all parties involved to the process of property transaction. Its worth to mention that almost all lenders require title insurance before disbursing money to a borrower.
Title insurance is beneficial from the point of view of a purchaser. It offers protection against any title problems if they are discovered in the public records. Additionally, it covers from non-record issues that couldnt be found even with a thorough research. Not only the owner, but also his descendants are covered with this policy, even after they sell the property. Any legal expenses related to the title issues will be fully paid off.
On the other hand, the seller is also protected with title insurance. The policy covers any financial loss if a prospective buyer rejects the title. The policyholder is also protected in case the buyer sues the seller.
For the majority of lenders title insurance is a must when making a mortgage loan. Banks and other financial institutions want to secure the money of their clients. And title insurance policy provides such guarantee. If there is any loss incurred from a title problem, they will be financially backed up a policy issuer.