Whether you’re purchasing a new or existing home, or refinancing, title insurance protects you against any problems affecting the title to your home.
There are two types of title insurance: the owner’s policy and the lender’s policy. The owner’s policy protects your property rights as the homebuyer, whereas the lender’s policy insures the financial investment of the bank or lender. If someone else claims ownership of your property or a lien on your property, title insurance typically defends you legally and financially.
Here are some examples of things that may affect title:
- Liens against the property that serve as security for the payment of an obligation, such as mortgage liens, judgment liens for unpaid court judgments, federal tax liens, state and local liens for failure to pay real estate taxes or assessments, mechanic’s liens to secure payment for property improvements, liens for recovery of child support payments and so on.
- Easements which are rights granted to a third party to use a part of your property for a specific purpose. An example is an easement to a utility company to have power lines running along the back of your property.
- Building or use restrictions contained in recorded plats, agreements or deeds.
- Claims arising out of bankruptcy or decedent’s estates.
These are just some of the many reasons why getting owner’s title insurance is crucial when buying or refinancing a home.
When you refinance, you are obtaining a new loan even if you stay with your original lender. Lenders will usually require a new title search and lender’s policy to protect their investment in the property. A new owner’s policy is not necessary at this time as the one you received when you purchased the property is good for as long as you or your family own the property.
Owner’s title insurance is a one-time fee based on the value of your home. In Texas, rates are based on the sales price of the property and set by the Texas Department of Insurance. You can calculate title insurance premium rates using the insurance calculator found on our website. With a home being one of the largest investments you’ll ever make, it’s clear why getting owner’s title insurance is a smart option.