When picking out what you put your money towards, you have to try to be as careful as possible with how you do it. Some things are going to be pretty worthwhile, but other things simply are not. Insurance can be expensive, and you may be wondering if the expense is worth it. One might have to shop around if that is a possibility.
One thing many homeowners and home lenders may wonder is whether, for example, title insurance is worth the expenditure. Much like other forms of insurance, title insurance can be complicated and expensive, and it is important to make sure you are protected while not breaking the bank for any kind of insurance.
Should you bother with title insurance?
In the grand scheme of things, one can only really justify spending what one can afford to spend. Yet, it cannot be denied that there are certain situations where affordability has to do with more than just the amount of money you can put towards something. But before you can determine whether it is worth having, it is important to understand exactly what title insurance even is and what it does.
Basically, title insurance, as mentioned above, is good to protect homeowners and especially home lenders, serving to protect their interests in the event that there is some issue with the title. It can be a lot of help when the person the home is being lent to is unable to continue paying for their home, giving you the opportunity to foreclose on the home and then take possession of the property back from them. Title insurance for owners works a little differently, however. For lenders, the borrowers are the ones who have to cover the costs of the title insurance.
The cost of title insurance is going to vary depending on how much the house costs; typically, that cost will come out to about .5% of what they pay for it, though additional costs that tie into geographical location and the company they are getting the title insurance through are going to be a factor. Unlike with title insurance for home lenders, homeowners have to handle the title insurance themselves, but it is an entirely optional thing. Title insurance for a home lender serves as security where a third party is involved, whereas since the consequences of not having title insurance as a homeowner does not cause damages for a figure such as a home lender, they may skip it entirely. Of course, whether they should skip it or not is up for debate.
A major benefit behind title insurance is that it provides a sort of safety net in the event that there are problems with the title. For example, what if the title has tax liens attached to it? Or what if there is a construction lien? These can create serious problems for you financially if that turns out to be the case, not to mention the time and effort you have to put into getting all of this squared away in the first place. Rather than having to deal with those tax liens yourself, title insurance can be used to cover that instead. It can even cover situations such as a court order that requires you to compensate someone for the value of the property, such as if they are awarded it (or its respective value).
Without title insurance, if the title for a home does have a lien against it, you would be the one responsible for paying out-of-pocket in the event that they filed a lawsuit against you that had merit. Essentially, it is comparable to if someone was injured on your property, and you lacked homeowner’s insurance that would protect you from the costs of that injury. In addition to this, title insurance provides protections, regardless of whether the case against you has merit or not.
But of course, not everything is necessarily going to be sunshine and rainbows with respect to buying title insurance. There is always going to be a need to do a risk-benefit assessment when making any major purchase, even if it may seem like the right idea at the time. For example, if you have a brand-new house, one that nobody owned before you and is fully paid off by you, the risk that you will need to account for problems with the title to it are pretty slim.
After all, you won’t need to worry that there is a lien on your home you did not know about, or some legal claim to your home. The risk that a title can have certain problems with liens, for instance, that you did not already know about going into the purchase is also relatively low. Just take care that you look over everything with a fine-tooth comb before you buy.
One factor that all too many people fail to recognize is that they may also experience unlawful treatment by insurance companies. After all, an insurance company is in it for financial gain, and there have been more than a few incidents where an insurance company behaves in an unscrupulous, and even unlawful, manner in how they handle you.
So not only do you have to be careful with whether you decide to get title insurance, you also need to be careful that you get from the right one. Because the wrong insurance company can do a lot of harm if you give them the chance to do so. Make sure to fully read what is covered and what is not covered in the plan before making the decision to purchase title insurance.
If you believe that you experienced unlawful treatment from insurance companies while navigating the title insurance process, make sure to speak with a lawyer to explore your legal options. That way, you can make sure that you can make sure a full investigation is conducted. Make sure to speak with a lawyer at dougterrylaw.com who can navigate through your title insurance concerns, especially if you believe you experienced unlawful treatment by the insurance company.