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Title Insurance vs. Homeowner’s Insurance: What You Need to Know

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Purchasing a home is one of the larger investments you will make and it is only natural that you will be filled with a lot of anticipation (and anxiety) for what is to come. Yet, this purchase carries with it a lot of responsibility. When it comes to protecting your investment, both title insurance and homeowner’s insurance can protect you, but what is the difference? In this blog, we will compare title insurance vs. homeowner’s insurance and describe the similarities and differences, so that you can make an informed decision.

What is Homeowner’s Insurance?

Many mortgage lenders require borrowers to have homeowner’s insurance for the full purchase price of the home and will not allow you to take a loan out without proof of coverage. While it is required by lenders, homeowner’s insurance is also a necessity for protecting you and your home. Homeowner’s insurance is a policy that covers destruction and damage to the home, loss or theft of possessions, as well as personal liability for harm to others. Paid annually, your homeowner’s insurance will cover most incidents that occur on your property. However, there are some insurance providers that will require separate coverage to be purchased for hurricanes, floods, and other natural disasters.

Similar to most insurance policies, homeowner’s insurance is divided into separate levels of coverage.

  • Actual Cash Value: This coverage will cover the cost of the home plus the value of your belongings minus depreciation.
  • Replacement Cost: The replacement cost policy will cover the actual cash value of your home and the possessions without the deduction of depreciation.
  • Guaranteed Replacement Cost: This coverage will cover whatever it costs to rebuild or repair your home.

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While homeowner’s insurance protects you from future events, title insurance will protect you from past occurrences that may affect your title to the property. A title insurance policy ensures that you are the owner of the property and that it cannot be taken away due to defects or liens in your home’s title. Before the home is officially yours, our team will perform a title search to ensure that the title is clear, however, title insurance will protect you if any defects or claims surface in the future.

What is Title Insurance?

While homeowner’s insurance protects you from future events, title insurance will protect you from past occurrences that may affect your title to the property. A title insurance policy ensures that you are the owner of the property and that it cannot be taken away due to defects or liens in your home’s title. Before the home is officially yours, our team will perform a title search to ensure that the title is clear, however, title insurance will protect you if any defects or claims surface in the future.

Similar to homeowner’s insurance, your mortgage lender may require you to purchase a lender’s policy which protects them against any title defects or claims. We recommend that homebuyers also purchase an owner’s policy to protect themselves against any title claims. Title insurance is a one-time fee and both policies can be purchased as a bundle to guarantee your ownership of the home is protected while you own it.

While homeowners insurance protects you from future events, title insurance will protect you from past occurrences.

Title Insurance vs. Homeowner’s Insurance – It is Your Choice

When it comes to navigating the world of homeownership and insurance, we recommend purchasing the amount of coverage that you believe is best. In the end, both title insurance and homeowner’s insurance are probably both required, but the amount of coverage you purchase can be your choice. As long as you feel that your investment is protected, we congratulate you on this amazing milestone.

To learn more about title insurance, please contact a member of our team today. We are always happy to help!

4 Real Estate Scams (and How to Avoid Them)

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Purchasing a home is an exciting milestone and the last thing you should worry about is being scammed in the process. In this blog, we are going to look at the four most common real estate scams and how you can avoid them.

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1. Wire Fraud

As you approach closing, one real estate scam that has become increasingly popular is wire transfer scams. Criminals are posing as the title company, real estate agent, or bank via email and providing instructions for how to pay your down payment and closing costs. The scammers use phone numbers, websites and email addresses that may look like the real deal but there is just one minor change the average person would never notice. 

For example, instead of receiving an email from orders@gnt.llc, you might receive an email from orders@gmt.llc. Did you notice the difference? If you follow the instructions provided in the scam email, then the scammers will withdraw the funds and leave you with few options of tracing them to get your money back.

How to Protect Yourself:

Protecting yourself from becoming the latest victim of wire fraud is simple with attention to detail. Before sending your money to the suspecting criminal, perform an independent web search for the lender or title company phone number and call the numbers that are listed to confirm the details of the wiring instructions.

We urge you not to click any links, call any phone numbers or send money online without confirming the wire instructions with the lender or title company. Your lender will have your account number and balance on file, so confirming this with them will also be a smart move on your end. Once you send money to the real lender or title company, give them a call to confirm that they have received it.

Cybercriminals will pose as your title company or lender in order to gain access to your information.

2. Nonexistent Home

When browsing for homes, apartments, or other real estate property – it is easy to get tied into the pretty photos, but this is where criminals can get you. Some scammers will post photos of rentals and homes for sale on craigslist and social media sites to lure in unsuspecting individuals. These scammers will ask for an upfront payment without seeing the place and when it comes time for the key exchange, they are no longer around.

How to Avoid This:

While the home, apartment, or property may be in a hot market – don’t rent or purchase the place without touring it first. Ensure that you are working with a real property owner or real estate agent by seeing the property in person and meeting with them in person at their office.

3. Faulty Home Inspection

Before purchasing a home, it is recommended to perform a thorough inspection with a qualified home inspector. A certified home inspector will search for unseen problems or hidden issues in the home, however, if the inspector is unqualified then the results will be the exact opposite. Like the other real estate scams, a home inspection scam can occur when the buyer does not have the necessary knowledge to know that they are being taken advantage of. Some of the common inspection scams can include hidden fees, disguising major problems with cosmetic fixes, and the inspector not completing the entire job.

Hire a Qualified Inspector

Before hiring a home inspector, you need to inquire about their background and experience. Real estate agents work alongside many real estate professionals, including home inspectors, and can recommend you to one or several individuals. While their pool of recommendations may be helpful, buyers should conduct their own research and make an educated decision. In most states, an inspector will be licensed and certified in the state that they operate in, so this is another key piece to look for when hiring the right professional.

A certified inspector has passed technical examinations, courses and follows a strict code of ethics.

4. Mortgage Loan Scam

After you make a big purchase, you are probably familiar with the phone calls that follow and real estate is no exception. You may receive a phone call from a “mortgage lender” that can lower your monthly payments and reduce your mortgage in exchange for a small fee and access to your bank account. Unfortunately, the moment you hand over your account numbers you will be in major trouble.

In order to avoid this scam and others of this nature, do not respond to unsolicited offers of loan modification and telling your bank account numbers to an unsuspecting party. When the time comes to refinance your mortgage, you can do so with a reputable lender or bank by meeting directly with them.

When it comes to the world of homeownership, it is an exciting and worthwhile investment. Buying a home is no easy task and especially for first-time homebuyers, it can be even more confusing. By being knowledgeable and paying attention to details, homebuyers can be successful in avoiding these common real estate scams.

Why Do I Need Title Insurance?

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When it comes time to close on your new home, you may be required to purchase title insurance. Unlike most insurance policies, title insurance is for protecting the lender and borrowers from issues that may have occurred in the past. In this blog, we will dive into the purpose of title insurance, what it covers and why you should purchase a policy.

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What is Title Insurance?

The purpose of title insurance is to protect real estate owners and lenders from losing the property due to any defects or liens in the title. Before purchasing your new home, a title company such as ourselves will do a search on the property’s title to determine ownership and ensure that it is clear of any claims. So while most insurance policies cover future events, a title insurance policy is to protect you from what happened in the past.

There are two types of title insurance policies: a lender’s policy and owner’s policy which are commonly offered as a bundle. A lender’s policy is required with purchase and refinance transactions and protects only the mortgage lender in the amount of the loan. An owner’s policy will protect the buyer. This title policy is not required to be purchased but we highly recommend purchasing it as a safety net. The coverage is the same but you will also be protected in the event of a title defect.

Coverage

Even after meticulously searching through public records, title defects or disputes can arise during the transfer of ownership. This is where title insurance can come into play. Here are some of the common title defects that may arise and you’ll be thankful you have coverage for:

  • Title forgeries and fraud
  • Filing errors
  • Conflicting wills
  • Liens from mortgage loans
  • Home equity lines of credit
  • Undocumented easements
  • Unreleased mortgages

Why you Need Title Insurance

Purchasing a home is a large investment, so why not protect it in every way possible? By purchasing title insurance, you are receiving extra protection and peace of mind that you are protected from any legal issue or defects that may occur after purchasing your home.

Still have questions? Our team at Greater Nashville Title is here to walk through the process and answer any questions you may have.