Protecting Your Home with Title Insurance

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Buying a home may be the largest investment you make in your lifetime. So before you close, you need to be sure that that nobody else can claim the property.

A title company ensures that your new home doesn't carry expensive encumbrances and other legal obstacles.

You pay the title company a single premium which includes the cost of verifying clear title and covers you in case some fault is later discovered in the title.

The title insurance company searches the title history of the property. Through its research, the title company can usually find any title problems that may arise and have these problems cleared-up before you close on the property.

Real Estate law is extraordinarily complex. Title companies make sure that all the T's are crossed and all the I's are dotted so you don't end up with a clouded title and legal problems. Your title insurance owner's policy will describe the property and outline the limitations on your ownership. It will also cover what the title insurance company is responsible for. Title insurance covers the following:

  • Contested title — This usually happens when someone who owned or even lived in the home before you claims to still hold an interest. In this case, the title insurance company will defend your title at no expense to you.
  • Defective title — "Defective title" covers any number of problems with the title to your home. It can even include a "contested title". Defects are rare, but they can be very difficult, making the property inaccessible, unbuildable, or unsaleable. Many other complex problems define "Defective title." The title insurance policy will protect you from these errors if the title company misses them.

At Southwest Funding #841, we answer questions about this process every day. Give us a call: (512) 291-6100.

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