Common Misconceptions About Title Insurance
Misunderstandings about title insurance are common among home buyers. Myths about title insurance have been told, preventing people from understanding the needed coverage. To help you understand why you need this type of insurance, let's discuss some common myths about title insurance.
1. There is only one kind of title insurance.
Early in the home buying process, a title search is conducted to review the property's history and uncover any issues that could affect your right to ownership. After a thorough examination of public records, there can be hidden title defects, such as tax liens, claims by heirs, or recording errors.
2. Title insurance is a monthly or yearly expense.
Title insurance is a one-time cost you pay at closing when you purchase or refinance a property.
3. Title insurance is costly.
The one-time premium for an owner's title policy is based on your home's purchase price and is a small percentage of closing costs. Coverage is provided as long as you and your family own the property.
4. Homeowner's insurance and title insurance are the same.
Title insurance protects a buyer's right to ownership and the mortgage company's investment. In comparison, homeowner's insurance is a policy that protects you against potential losses or damage experienced to the structure of your home or its contents during an insurable incident.
5. Title insurance isn't necessary when refinancing.
An owner's title policy is valid as long as the current owner or his heirs hold the property's title. Since refinancing involves taking out a new loan while staying in the same house, you may need to purchase a lender's policy. Your lender may require a new insurance policy to ensure that there haven't been any title issues that have occurred during your ownership.
6. The seller can transfer title insurance at the closing.
Title insurance is not transferable. You can request the seller provide you a copy of their title insurance to present to the insurance company to request a reissue rate if applicable.
Title insurance is a complex subject, but Ohio First Land Title is here to help you navigate the process. The OFLT team has plenty of experience serving Northeast Ohio. We are happy to answer any questions you might have. Contact us today!