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Why Your Home Title Could Be At Risk

Monday, July 5, 2021

What’s your biggest worry when buying a new home? For some, it’s the thought of something being wrong with the house physically. A broken HVAC system or a cracked foundation can cost thousands of dollars. 

However, there’s another issue that can arise with your home that has nothing to do with the physical house. This issue is so serious that it could end up costing you ownership of your house. 

The issue is a home title defect on your property. Title insurance protects you against discrepancies in records related to the title of your home. Just as an inspection protects you from previously unknown issues with your physical home, title insurance protects you from previously unknown issues with the title of your home. 

There are different types of titles insurances that you should be aware of before buying your home. In the article below, you’ll find a guide to what types of title insurance you might encounter, and all the possible issues that can arise if you don’t get title insurance. Read on to make sure you’re informed about this added house cost.

The Different Types of Home Title Insurance

There are two different kinds of title insurances that you may run into when buying a home. The first is lender’s title insurance. This is title insurance that is meant to protect the entity lending you the money to buy the home. 

You may be asking, what’s the risk to the party lending you money to buy a home? Since they’re lending you money using the home as collateral, they have to be sure there won’t be any issues with the title. Lenders may require you to buy title insurance.

The other type of title insurance is owner’s title insurance. What could happen to you if you buy a home and there are issues with the title? You could suffer financial loss related to the legality of your home title. Owner’s title insurance is often purchased by the seller to protect the new owner from financial loss.

Risks That Title Insurance Protects Against

It’s possible that the previous owner of your home owed property taxes and failed to pay them. It’s also possible that there is an existing lien on your home, and that the lienholder may ask you to pay back the loan. 

How does it happen that new homeowners run into issues with title discrepancies? It often has to do with old property records that weren’t kept in a digital database, but that can still surface if someone digs them up.

Title Insurance Protects Lenders and Buyers From Issues

Even though home title insurance is an added cost to an already expensive purchase, it is a necessary one. Title insurance provides peace of mind by protecting you against old claims and legal action from any issues that may have arisen with your title over the years. To learn more about title insurance, get in touch with the experts at Heartland Abstract. 

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