When you purchase a home, you receive a title to the property stating that you own the property. Title insurance protects you and/or your lender from any claims that you do not fully own the property.
According to Fortune, in 2021, homes sold at the fastest rate than ever before, and many of these buyers chose to purchase title insurance to protect their interests. Although title insurance can be a helpful part of protecting your interests, there are still many myths that surround this type of insurance.
1. You only receive minimal protection
When you purchase title insurance, your insurer will search public records for common title defects, like forged signatures or tax liens. Even after you take ownership, title insurance can still provide protection if a defect arises months later.
2. Only one type of title insurance exists
If you decide to take out an owner’s policy for title insurance, you will receive protection from legal expenses and financial loss for any title defects that arise. You can also enhance your coverage to provide protection from issues that occur at any point during ownership.
3. You do not need this insurance with an all-cash purchase
If you pay cash for a property, a lender’s title insurance is not necessary. However, you should still consider purchasing an owner’s policy to cover any potential damages or loss from a title defect.
In addition to purchasing title insurance, you may also want to have a title opinion completed before buying real estate. This can give you a clear picture of the complete history of the property you want to buy.