If someone sues and claims they have a claim against the home from before the homeowner purchased it, owner’s title insurance protects the homeowner.
When you buy a house, you’ll get a deed, which shows that the seller has transferred legal ownership, or “title,” to you. If someone sues you later and claims they have a claim against the house from before you bought it, title insurance might protect you. Contractors who claim they were not paid for work done on the home before you bought it or a prior owner’s refusal to pay taxes are common accusations.
Lenders and Title Insurance
Most lenders need you to obtain a lender’s title insurance coverage, which protects the amount you’re borrowing. You should consider purchasing an owner’s title insurance policy to protect your financial investment in the home.
When it comes to title insurance, you may usually shop for it separately from your mortgage. You might be able to save money on title insurance if you shop around. When purchasing owner’s title insurance, it is normally less expensive to use the same provider for both the lender’s and the owner’s policies than than purchasing them separately.
Your title insurance provider may give you an itemized list of expenses at closing, which may differ from what is listed on your Loan Estimate or Closing Disclosure, depending on the state where you are buying your house. This does not always imply that you are being overcharged.