Buying a property can be one of the biggest investments you’ll ever make. That’s why it’s important to ensure that your investment is protected from any unforeseen risks or legal issues. One way to do this is by purchasing owner’s title insurance, which provides coverage for potential title defects that could affect your ownership rights and cause financial loss.
But did you know there are two forms of owner’s title insurance? In this blog post, we’ll discuss both standard and extended owner’s title insurance, what they cover, how much they cost, and when you should purchase them to safeguard your real estate investment. So let’s dive in!
Standard Owner’s Title Insurance
Standard owner’s title insurance is a type of policy that provides coverage for potential title defects that existed prior to the policy issuance. This includes issues such as unknown liens, unpaid taxes, and forged documents.
One important thing to note about standard owner’s title insurance is that it only covers issues that were not disclosed during the underwriting process. The policy will not provide protection against any known or foreseeable risks.
In most cases, lenders require borrowers to purchase standard owner’s title insurance before closing on a property. However, even if it’s not required by your lender, purchasing this type of coverage can still be beneficial in protecting your investment.
The cost of standard owner’s title insurance varies depending on several factors such as location and purchase price. Generally speaking, the premium ranges from 0.5% to 1% of the total purchase price.
Some people may think they don’t need an owner’s title insurance since they already did thorough research regarding their intended property; however, there are certain things you might overlook despite great effort in researching alone which could create problems down the road without proper coverage like Standard Owner’s Title Insurance
Extended Owner’s Title Insurance
Extended Owner’s Title Insurance is an upgrade from the standard owner’s title insurance policy. It provides all the coverage of the standard policy and adds protection for additional risks that may not be covered by a standard policy.
One of the main benefits of extended owner’s title insurance is that it covers risks like boundary disputes, encroachments, zoning law violations, and unrecorded liens. These are additional threats to your ownership rights which can cause significant financial loss if not addressed.
In contrast to the standard policy which usually expires when you sell your home or refinance, extended owner’s title insurance lasts indefinitely as long as you own your property. This means that even if issues arise years after purchasing your home, you’ll still be protected under this type of policy.
However, it’s worth noting that extended owner’s title insurance comes at a higher cost than its counterpart due to its more comprehensive coverage. The actual cost varies depending on several factors such as location and price of property involved in purchase or sale.
Extended Owner’s Title Insurance offers more protection against potential losses related to real estate transactions compared with Standard Owner’s Title Insurance policies.
What Does Title Insurance Cover?
Title insurance is a type of insurance policy that protects homeowners and mortgage lenders from financial losses due to defects in the title of a property. The coverage typically lasts for as long as you own the property, and it can provide you with peace of mind knowing that your investment is protected.
One major aspect that title insurance covers is any errors or omissions in public records. This can include issues such as liens, encumbrances, or other claims on your property’s title. If these problems are discovered after you’ve purchased your home, they can be incredibly costly to resolve without proper insurance.
Title insurance also covers certain types of fraud related to the sale or transfer of a property. For example, if someone has forged signatures on legal documents associated with your purchase, title insurance may help cover those costs and protect against further fraud attempts.
In addition to these protections, title insurance may also cover expenses associated with defending against legal challenges to your ownership rights and resolving disputes over boundaries or easements affecting your property.
Having owner’s title insurance can provide valuable protection against unexpected financial losses when buying a new home or refinancing an existing one.
How Much Does Title Insurance Cost?
One of the most common questions asked about owner’s title insurance is: how much does it cost? The answer to this question depends on several factors, including the location of the property and the price of the home.
In general, standard owner’s title insurance can cost anywhere from a few hundred dollars up to $2,000 or more. Extended owner’s title insurance may be slightly more expensive. However, when compared to potential costs associated with undetected liens or other issues that could arise without title insurance protection, many homeowners consider it a worthwhile investment.
It’s important to note that while some states regulate title insurance rates and fees, others do not. This means that costs can vary widely depending on where you live and who your chosen provider is.
When shopping for title insurance coverage for your home purchase or refinance transaction, it pays to get multiple quotes from different providers in order to compare prices and find the best value for your needs.
While no one wants yet another expense added onto their already costly real estate transaction, paying for an Owner’s Title Insurance policy upfront will protect you from unforeseen legal disputes down the line.
When Should You Purchase Title Insurance?
When it comes to purchasing title insurance, timing is everything. Most homebuyers purchase owner’s title insurance during the closing process when they buy a new property. This insurance policy protects them against any potential issues that may arise with the property’s title.
It is crucial to remember that you only have one opportunity to purchase title insurance, and this occurs during the closing process. You can’t go back and obtain coverage after an issue arises with your property’s title.
Therefore, it is important for homebuyers to be proactive and understand the benefits of obtaining owner’s title insurance before they close on their new property. By doing so, homeowners can avoid potential headaches down the line and ensure that their investment in their new home is protected.
Purchasing owner’s title insurance provides peace of mind for homeowners by protecting them from unforeseen issues related to their property’s ownership. Don’t wait until it’s too late – take action now!
Conclusion
Purchasing owner’s title insurance is a wise decision that can protect you from unforeseen legal and financial issues related to your property. Both standard and extended forms of owner’s title insurance offer different levels of coverage at varying costs, so it’s important to choose the policy that best fits your needs.
While the cost of title insurance may seem like an additional expense when buying a property, it can actually save you thousands in potential legal fees and expenses in the long run. It’s also important to note that lender’s title insurance only protects the lender, not you as the homeowner.
When purchasing a property, be sure to work with a reputable title company or attorney who can help guide you through the process and ensure that all necessary steps are taken to protect your ownership rights. With owner’s title insurance on your side, you can have peace of mind knowing that any potential issues related to your property will be covered.