Why You Need Title Insurance for Your New Home

It’s time for Sue and Frank to finalize their home purchase—but wait. Before they sign those important papers, it’s essential that they get title insurance for the new home they’re about to buy. Why would Sue and Frank, or indeed anyone, get this type of insurance? Well, because purchasing a new home is likely to be the biggest financial investment any of us will ever make in our lifetime, so we will want to protect our investment. And how can we protect it? Through buying title insurance!  Let’s look at the importance of having title insurance.

What is title insurance?

A title is a deed to a property. Title insurance is issued by an insurance company and guarantees that the home you are buying is free and clear of any previous claims or liens. If the condition of a property title is not what you understood when you purchased your home, a title insurance policy protects you against any and all losses that may occur as a result.

• • •

What is it for?

You want to actually occupy your new home and live there for many years without any fear of becoming responsible for debts or obligations that came with the property, right? It’s also true that you want to be able to sell your home whenever and to whomever you want. That’s why you need title insurance – it is designed to protect your rights to live in and sell your property freely.

• • •

Why do I need it?

Most importantly, you must ensure that the person selling a house to you is actually the owner of the property. This involves having a title company research to confirm that the true property owner is the one making the sale. Title insurance also gives you protection against any future claims that may affect your title, such as a lien, legal action, rights of way, or disputed interests. And remember, your interests are separate from those of your lender, so be sure to secure a title insurance policy that covers you, and not just your lender.

• • •

What does it cost in the state of Texas?

Title insurance costs vary depending on the value of your new home. In Texas, the first $100,000 can be insured for $875. From there the costs per $100,000 go down. To give you an idea, a home worth $270,000 would require an $1,817 title insurance policy. Check out the Texas Department of Insurance’s Title Insurance Basic Premium Rates online for a breakdown of the calculations.

• • •

When do I get it?

You need to have title insurance before you close your purchase transaction. This ensures all potential issues are cleared before the sale is final.

• • •

Where do I get it?

You’ll work directly with a title company to obtain your insurance. Do a little research before you select your company, though. You could ask your real estate agent or mortgage lender for a recommendation or contact the Better Business Bureau for a list of reputable companies. Then check to make sure the company has many years of experience and comes highly endorsed.

• • •