When purchasing residential property, title insurance is a must. This type of policy provides protection for your investment if another person or entity lays claim to the property. Most mortgage lenders require home buyers to pay the cost of their title insurance for the home.
Whether you are buying a home for the first time or trading in a starter home for a larger spread, attain peace of mind with trustworthy title insurance.
How title insurance works
Deed records are not necessarily accurate, especially for properties built decades ago. If the title for your home is incorrect, title insurance pays the costs associated with the error and reimburses you for property loss related to the title. Situations that require the assistance of your title insurance policy include previously unrecorded easements or liens, forgery, transferred ownership rights, unintentional recording errors and other title defects.
Before the home purchase is complete, a title research company declares that the home has a “clear title.” This means the property has no outstanding liens or claims. However, title insurance protects you from future claims that arise.
Purchasing title insurance
The typical title insurance policy costs about $500 to $1,500 depending on the cost of the property and other factors. In Florida, buyers can choose from either an owner’s policy if they are paying cash or a lender’s policy if they are financing the purchase. Expect to pay about 2% to 5% of the purchase price. Usually, you pay for title insurance at settlement as part of your overall closing costs for the property.
Title insurance is a one-time cost, not a monthly premium. The policy stays in effect until you sell, pay off or refinance the home. If you purchase an owner’s policy, you can also opt for extended coverage. This type of policy covers issues such as inaccurate land surveys, structural damage and issues with the zoning law or building code in your area.