In the period leading up to closing, your lender will require you to take steps to protect its investment in the property. One of those protective steps will likely be securing title insurance. Title insurance differs from the mortgage insurance you have to get and is just as necessary. If you are buying a home, here is what you need to know about title insurance.  

Why Do You Need Title Insurance?

During the home buying process, a title company will research the title for the home. The company will look for anything that could result in a challenge to your ownership of the property. For instance, if the seller of the home is not the rightful owner, the title search should reveal this.  

Other issues that the title company will look for include divorce decrees that could impact the purchase, liens, and tax issues. If there are any problems with the title uncovered, the company will inform you. You can use that information to demand the seller resolve the issue. You can also choose to walk away. 

Once the title company has thoroughly investigated the title, it will issue insurance if the title is clear. The insurance is designed to protect you in the event that there is a legal conflict regarding the title. Without the insurance, you could be faced with paying for the related legal fees.  

What Should You Look for in a Title Company?

You have the right to choose the title company. Even if your lender prefers that you use a certain company, federal law gives the power to select to you.  

Unless you have previously worked with a title company, selecting one can seem overwhelming. However, there are some ways you can ensure you get a company that will fit your needs and will provide you with insurance rates that you can fit into your budget.  

You can narrow down your choices by reviewing consumer reports and checking for complaints against the company. You can also compare the insurance rates that are being offered to further narrow the options.  

It is important to note that there are exclusions that come with every insurance policy offered. Carefully read those before agreeing to contracting with a title company so that you are clear on what is and is not covered through the policy.  

Your real estate agent or lawyer can likely help you select a title company to use for the purchase of your new home. For more information, contact a business such as TitleSmart.