As you get closer to closing on your new property, you will hear about Title Insurance and wonder what it is and why it’s important. Title insurance is a protection for you and your lender from the potential chances of someone else having a claim or interest on the title to your new property.
Your lender requires a policy for their interest and you may feel like any additional title insurance really isn't necessary. But that policy only protects the lender from claims, so they don't lose out on the investment they made in your home by providing you with a mortgage. It is highly recommended that you secure your own policy, which is called a Homeowner’s Policy. This covers you if there is ever a problem.
Fortunately, unlike other types of insurance, you won’t need to make payments on this policy. Instead, you make a one-time payment at closing and that policy covers you for the entire time you own the property. When you sell your home, the policy will not transfer and the new owner will need to purchase their own policy.
Title companies search your property for any liens, claims, and any evidence that title work was not done properly in the past. If the title company finds any issues, it’s cleared and taken care of before you go to closing to ensure a clear title. But mistakes can be made, and claims can be overlooked or appear at a later date. The protection of Title Insurance keeps you safe from issues that may appear in the future.