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.

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.

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