When you buy a new home, the lender responsible for your mortgage will require that you have some type of homeowners insurance policy. This lets you pay for the cost of repairs and other issues with your home. After paying your deductible, insurance will kick in and cover the remaining balance. When buying or refinancing a home, you may also want to look at buying title insurance. Title insurance acts as additional protection against issues that may occur in the future, but you need to know how this insurance works before you purchase the coverage.
What is Title Insurance?
Title insurance is essentially a type of insurance that kicks in when someone places a lien against the property. A lien usually relates to some type of court judgment that occurs after you defaulted on a loan. The government may also place a lien on your property until you pay off any back taxes you owe to the state or federal government. The amount of protection you receive depends on the amount of coverage you buy. If you have a $100,000 policy, the insurance should cover liens lower than or equal to that amount.
Why Buy Title Insurance?
The main reason homeowners buy title insurance policies is because they want to protect themselves against future issues. Your lender may request that you purchase this type of policy as well. This lets the mortgage lender defend itself and avoiding losing money later. If you have a lien on your home and walk away from the property, your insurance will pay out to your lender and let the lender earn back the total cost of the mortgage or a portion of the mortgage. Title insurance only costs a small amount each month but saves you a lot of worrying.
Buying Title Insurance
Not all insurance companies that offer policies for homeowners also offer title insurance policies. Though you might not like the idea of shopping around for a policy, comparing prices from top provides can help you save quite a big on a policy designed to protect your house. Click here to find a simple way to compare rates from the top companies. When you receive your quotes, look closely at how much you can get based on what you can spend each month. With title insurance, you can protect your home court ordered liens.