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June 28th, 2019

The Big Deal Behind Property Title Insurance

With increased value comes an inherent increased risk when it comes to real estate deals, which is a primary motivator behind many Texas homebuyers opting for title insurance.

 

 

The Big Deal Behind Property Title Insurance

With increased value comes an inherent increased risk when it comes to real estate deals, which is a primary motivator behind many Texas homebuyers opting for title insurance. For example, the median home value in Austin, TX has increased by 33 percent over the past five years. Point2Homes reports that from December 2013 to December 2018, Austin’s median home price increased from $226,000 to $301,391. In many of these cases, lenders require title insurance, but buyers should also consider insuring their own investment. Before you jump into the closing process, it’s important to understand the fundamentals of Texas title insurance for your home purchase.

What Is Title Insurance?

Property title insurance differs from other insurance products in a unique way. When you buy vehicle or health insurance, you’re protecting yourself from future accidents. You pay the coverage provider to be available whenever you’re in an accident or get ill.

Title insurance is different in that it insures you against events that have occurred in the past. When you purchase a property, title insurance guards you against owing for debts or settlements that have been placed against the home due to negligence or restitution required from the previous owner.

Title insurance exists for the real estate buyer and the lender. As we mentioned before, nearly all lenders require buyers to purchase title insurance to cover the investment of the bank. The future owner should also purchase title insurance – a separate policy – to protect their personal investment in the home.

What Type Of Protection Does Title Insurance Provide?

Title insurance minimizes your potential for liability toward liens, settlements or debts owed by the previous owner. An extensive title search will be performed to discover any foreseeable issues. Once the home is purchased, title insurance continues to protect you against any litigation or undocumented liens.

How Much Does Title Insurance Cost?

The title insurance cost is covered in a one-time payment. There are no monthly premiums as with other insurance policies. Title insurance will vary depending on your state and the price of the property. The average national cost of title insurance is about $1,000, but again, that amount will change depending on your location and property value.

Complicated issues with a title are unlikely to be detected by the average homebuyer. Without title insurance, you could end up owing thousands, even losing the home, due to actions by the previous owner. Only owner’s title insurance will protect you if a title issue is detected. Common title insurance claims include fraud, undiscovered liens, errors in public record and omitted heirs.

How Does A Title Search Work?

A title examiner will analyze past ownership of the property to assess the validity of the title and ensure it’s “clean,” or free from problems. The search will ensure the property passed from one individual or company to the next through properly documented procedures and doesn’t have any current legal claims against it that would prohibit the title from being transferred.

Title insurance is a valuable protection for homebuyers as most title issues can’t be detected by the purchaser. Guard yourself and future home by investing in title insurance.