When buying a home in Northern Virginia, it’s essential to understand the different types of title insurance policies. Title insurance is a type of coverage to protect against problems with a property title. Knowing the types of policies available can help you make wise decisions and ensure a smooth real estate transaction.
Keep reading to learn more.
What is Title Insurance?
Title insurance is a policy that protects homebuyers and mortgage lenders from monetary losses caused by a bad title. A bad title can happen due to defects like outstanding liens or conflicting wills. However, with title insurance, buyers can avoid losing their property and facing legal problems. In most cases, the insurer will handle everything if a problem with the title arises.
Types of Title Insurance Policies
Lender’s Title Insurance
A lender’s title insurance policy is a type of insurance that protects banks and mortgage companies. It guarantees their financial interest in the property if there is a problem with the title. However, it’s important to note that the lender’s title insurance only protects the bank or lender. The buyer would need to get their own policy to protect against these issues.
If you want to ensure you have protection, ask your title company about title insurance when buying a home.
Owner’s Title Insurance
Holding the title to a home is the most important part of homeownership. You wouldn’t want to buy a home and then later find out that there is some type of issue with the title. Owner’s title insurance can provide financial protection if there is an issue. The title company will work to resolve the problems on your behalf.
The policy is also different from the lender’s title insurance policy, which only protects the lender if there’s a problem. The owner’s title insurance policy can address issues like lawsuits, liens, and encumbrances that invalidate the seller’s legal claim. It also covers undisclosed easements or other agreements that limit property use or value.
A title search is the first step in ensuring a legal and clear title when buying a home. However, title searches can miss issues that may cause problems for the buyer after the sale. If there are any problems, the insurer will help you resolve them. They may even pay settlements to ensure you get to keep your property.
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