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Everything You Need to Know About a Title Policy

Title Policy

 

When purchasing a home, a title policy is an important aspect to consider. Here is everything you need to know about a title policy. A title policy is a type of insurance policy that protects the buyer of a property from any financial losses due to title issues. What are title issues? Let’s say you purchase a home and the previous owner didn’t payoff their mortgage. That would be a major title issue. You certainly don’t want to own a home that has a lien against it for a debt that you don’t owe. In this article, we’ll explain what a title policy is, why it is important for a home buyer to have one, and provide examples of when a buyer might use their title policy.

What is a Title Policy?

A title policy is a type of insurance that protects the buyer from title-related issues that may arise in the future. The policy provides peace of mind and financial protection for the buyer, ensuring that they are protected against any unexpected title issues that may arise. The policy is usually purchased at the time of closing and can provide coverage for as long as the buyer owns the property. Generally speaking, mortgage lenders require that the property be covered by a Title Policy.

How much does a Title Policy Cost?

The cost of the title policy is usually a one-time fee, paid at the time of closing. Whether the seller or buyer pays for it is negotiable, but most often the seller pays for the title policy. The cost of the policy is set depending on the sales price of the property. You aren’t able to shop for discounted policy rates because the policy price is set by the Texas Department of Insurance. You can check the cost of a policy using this TITLE POLICY CALCULATOR.

Why is a Title Policy Important for Home Buyers?

A title policy is important for home buyers because it provides financial protection against title issues that may arise in the future. For example, let’s say you purchase a home that was sold as an estate after the original owner past away. Year later, an heir shows up to claim their inheritance and insists that they are the rightful owner of the home. In such a scenario, a title policy can provide protection and help resolve the issue in a timely manner.

Examples of When a Buyer Might Use Their Title Policy

There are several situations where a buyer might use their title policy:

  1. Discovery of liens or encumbrances – Example: Liens from prior loans were not paid off, or were paid off but not released.
  2. Disputes over ownership – Example: A homeowner sells a property that their spouse didn’t agree to. The spouse later appears and claims ownership of the property.
  3. Fraudulent conveyance – Example: Someone sold a property that they did not rightfully own.
  4. Public Records Errors – Example: Clerical errors or missing information in a deed.

In all these situations, the title policy can provide financial protection to the buyer and help resolve the issue in a timely manner.

In conclusion, a title policy is an important aspect of the home buying process. It provides peace of mind and financial protection for the buyer, ensuring that they are protected against any unexpected title issues that may arise in the future. Investing in a title policy is highly recommended for all home buyers to protect their investment and ensure a smooth home buying experience.

Whether you’re a buyer or seller, our agents at Origen Realty will coordinate with your title company and help you navigate this process.

*BONUS: If you are selling your home…

We’ll list your home for sale and save you thousands of dollars in commission with our full service, flat fee pricing model. See SELLER SAVINGS to learn more.

 

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