When you’re a first-time buyer of real estate, the transaction involves a number of fees, terms sound alien apart from other requirements.
Title insurance is one such cost in which buyers don’t have any say since they either this type of insurance or they will not be able to get a loan.
But it’s a good idea to understand what ‘title insurance’ is before you go ahead and purchase it.
Now when you purchase a home, it’s a good idea to check whether or not the seller has full and legal title to the property.
Usually, the closing party confirms this by going to the local property records office so as to research the history of ownership.
However, it gets tricky here. Even if the records are accurate they can still be wrong for a number of reasons.
For one, the person who researched the information might have got it wrong. Other reasons might include not paying taxes or even simple bills related to the property.
In particular, if the person who owned the property a number of years ago might have had another wife that wasn’t included in the property records. In this case, you might get into legal issues and as a result, might even lose the house.
So, for this reason, you will have either two types of title insurance: lenders’ & owners’ insurance.
Both these types will protect the owner’s equity on the property as well as the mortgage amount that the lenders offer the buyer or the owner.
That said, all buyers in the United States except for Iowa must have title insurance. For Iowa, if there is a title error, the state covers the costs.