If you’re in the process of buying or selling a home in New Jersey, you may be wondering why your lender requires title insurance. And what is title insurance, anyway? Here are a few facts about title insurance that you may not know with insight from an experience title insurance agency in New Jersey:
Fact 1: Title insurance protects you from financial loss if there are any property title problems
Title insurance protects the owner of a property from any claims or problems that may arise from the property’s history. It is an insurance premium paid once at the time of purchase, and it covers the buyer for as long as they own the property. Title insurance is not required by law, but most would recommend title coverage to protect your investment. There may be many title insurance terms that you’re unfamiliar with, but our team will be able to help you understand.
Fact 2: Most lenders require title insurance if you borrow money to purchase a home
When you buy a home, you make one of your life’s most significant investments. The last thing you want is to find out that there are problems with the title to your home that could jeopardize your ownership. That’s where title insurance comes in and why lenders require it.
Fact 3: Title insurance is relatively inexpensive
The cost of title insurance varies depending on the property’s value and is typically a one-time fee paid at closing. Some lenders require the borrower to purchase title insurance, while others may offer it as an option. Title insurance costs are usually a percentage of the home’s purchase price. A mistake that first-time homeowners make is not purchasing title insurance because they are concerned about the cost. We don’t want you to fall into that category.
Fact 4: You only need to purchase title insurance once when buying your home
If you’re buying a property, your lender will require you to purchase a title insurance policy. The premium for the policy is based on the property’s purchase price and is paid in full at the time of closing.
Fact 5: Your title insurance policy is valid for as long as you own your home
We are used to paying for several insurances regularly. Similar to how we might pay for auto, life, or home insurance. However, title insurance is different. Once the policy has been paid for, and coverage has been bound, it remains in effect as long as your interest in the property does not change. Keep in mind that there are differences between a deed vs. a title so be sure that you have ownership looked at.
Fact 6: You can choose your title insurance company
If you are purchasing a home, your lender may automatically select a title insurance company for you. However, you can request that you would like to use your title company of choice, and typically, they should not object. So, shop around and talk to people to determine what title company offers the coverage and knowledge you need to feel comfortable with your property purchase.
Fact 7: You can buy the coverage, even if you already own the property
If you purchased your property without obtaining title insurance, most title companies allow you to purchase it at a later date. With title insurance as affordable as it is, purchasing a policy to protect your investment makes perfect sense and will help you sell it down the road.
When buying property, you may have questions regarding title insurance. Please contact us today. We operate in every county of New Jersey and have been insuring titles for more than 50 years.