The whole home buying process can get daunting at times. For the non-professional there is so much to consider. Do you need an inspection? Do you need a home warranty? And, today's topic: Do you need title insurance?
First: What is title insurance?
Simply, it is a contract that protects the borrower/buyer against loss or damage due to title defects. It protects you if someone challenges the ownership (title) to the property. In certain scenarios there can be title defects that are unknown when the property is purchased. One nationwide survey found that in 25% of real estate transactions there are defects in the title that are usually unknown. That is where the title company plays an important role. They check for defects in the title by examining public records. The search done by a title company determines who owns the property, if there are any liens, and the condition of title.
Second: What does it protect you against?
For starters it protects against mistakes in recording of legal documents. Forged deeds, releases or wills are covered. Undisclosed or missing heirs including spouses are covered. You will also be protected against deeds by persons of unsound mind, deeds by minors, and deeds executed under expired power of attorney. You will also have protection against liens for unpaid taxes and fraud. Want a more detailed explanation view Land America Commonwealth.
How long does title insurance last? A policy will remain in effect as long as the owner owns the property. It is a one time cost. Its not a reoccurring fee like your home owner's insurance.
Third: How much does it cost?
Your policy cost is calculated on a formula tied to the total purchase price. Take the median priced home in our Beaumont housing market, a policy for $150,000 purchase price would cost approximately $1,110. Title companies are governed by the Texas Department of Insurance and charge the same rates, which are set by TDI.
Yes is the answer.
You should spend the money on title insurance. It is your assurance that the home you're buying is protected and covered from title problems. A small price to pay to protect a big investment.
In Beaumont you have several choices of title companies. One choice Southeast Texas Title Company is associated with Chicago Title Insurance Company a company that has been in business more than 160 years. They are also members of the Texas Land Title Association.
Once you have a title insurance policy in place then you can focus on all the other important issues that go with buying a home.