Title Insurance
Title Insurance 101
Buying a house can be an overwhelming experience, for both first time homebuyers and even veteran investors. There are long complicated forms to sign, legal language that you can’t understand and mysterious fees. This article is designed to explain one common confusing service fee, that of title insurance.
A title is the foundation of your legal right to live in and use your home. Because a title is so important, your attorney will conduct a title search which should uncover such past problems as unpaid taxes from the previous owner. Great, but unfortunately this search cannot uncover all future potential problems with a title. There may be hidden defects lurking which will only be exposed later, such as forgery or fraud. Title insurance is designed to provide protection for this unfortunate and costly situation.
In Louisiana, lenders title insurance is required. This protects your mortgage company in the event of future defects in the title and is typically to be purchased by the buyer. It provides NO protection to the new homeowner. In contrast, owners title insurance is optional and so homebuyers commonly ask, “Do I really need to spend more money to buy a homeowners policy?” Yes!
Let’s use an example to illustrate how much money is at stake; for a $150,000 house, purchasing the required lenders policy AND an owners policy would cost $715. Buying the required lenders policy only, would still cost $525.* For just an additional $190, a homeowner can purchase peace of mind for the length of time they own their home, and in some cases even longer. Given the rising legal costs of defending a title claim, and the associated stress of litigation, a one time fee of $190 seems like a smart investment.
* Every situation is different. Prices quoted are approximate only and may vary. To decide whether title insurance is the right choice for you, we recommend that you discuss the benefits of title insurance with your real estate professional or attorney.