Misunderstandings about title insurance are common among home buyers. Myths about title insurance have been told, preventing people from understanding the needed coverage. To help understand why title insurance is necessary, let’s discuss some common myths.
Title insurance is costly.
The one-time premium for an owner’s title policy is based on the home’s purchase price and is a small percentage of closing costs. Coverage is provided as long as the current buyer owns the property.
Homeowner’s insurance and title insurance are not the same.
Title insurance protects a buyer’s right to ownership and the mortgage company’s investment. In comparison, homeowner’s insurance is a policy that protects against potential losses or damage experienced to the structure of your home or its contents during an insurable incident.
Title insurance isn’t necessary when refinancing.
An owner’s title policy is valid as long as the current owner or his heirs hold the property’s title. Since refinancing involves taking out a new loan while staying in the same house, it may be required to purchase a lender’s policy. The lender may require a new insurance policy to ensure there haven’t been any title issues that have occurred with the current owner.
Title insurance can be transferred by the seller at the closing.
Title insurance is not transferable. You can request the seller provide you a copy of their title insurance to present to the insurance company to request a reissue rate if applicable.
Title insurance is a complex subject, and we are here to help you navigate the process. We are happy to answer any questions you might have. Contact our team today!