Being a first-time homebuyer can be frustrating. After all, because of Florida’s sizzling-hot real estate market, you may have to save for years for your down payment. Indeed, according to Zillow, the average home in the Sunshine State currently sells for almost $400,000.
If money is in short supply, you may wonder if it is necessary to pay for title insurance. The real question you should be asking yourself, though, is whether you can afford not to buy title insurance.
What is title insurance?
Title insurance is a type of insurance that protects your real estate investment. Specifically, with title insurance, you have protection against certain claims others may make against your property.
If, for example, someone claims they own part of your land from some transaction in the past, your title insurance provides you with representation or compensation. It also helps to ensure the seller is transferring real estate that actually belongs to him or her.
How much should you budget?
Luckily, because Florida law determines the price of title insurance, no agent should try to price gouge you. Even better, title insurance is affordable to most first-time homebuyers, especially when compared to other homebuying costs.
For budgeting purposes, you should plan to spend between $500 and $1,500 for title insurance, although you likely can tailor your policy to meet your budgetary constraints.
What are the risks?
Without title insurance, you may spend an unconscionable amount of money defending claims against your property. You also may not be able to sell your property when you want. Ultimately, given these costly risks, it is advisable to come up with the money for a one-time purchase of title insurance.