Coldwell Banker First Equity Realtors

Title Insurance

Title Insurance

Title Insurance

Amarillo mortgage lenders (and surrounding areas) require their customers to obtain title insurance. A title is the legal document of ownership for a property. Title companies perform a title search, which is an extensive search through legal documents to prove the person selling you property has legal claim to do it. So why have title insurance when you've had a title search done? The search may have made an error, or it may have come across forged documents, which would pass the title search. Around six percent of all policies have a claim, so it is not as uncommon as some may think to have a claim.

You will have to have title insurance even if you refinance your mortgage. The mortgage lender wants insurance against a lien on the property superior to the lien they will place on the property at closing. A lien is a legal claim against a property usually because of debt. If you don't pay your taxes or a contractor that performs work on your home, you could have a lien on your property.

In the event a superior lien is enforced against your property, the title insurance will pay the mortgage company the balance of the principle owed them over the life of a mortgage. If you purchase a home valued at $100,000 and put down 10 percent, then your title insurance will protect the amount owed to the bank ($90,000). As you pay off the equity, the bank is insured against only the remaining amount you owe. This means the insurance covers a depreciating amount over time.

An owner's policy protects the homeowner's equity investment. Of that $100,000 home you put down $10,000 in equity as down payment, you are covered for that amount, which increases year after year until the principal is paid off to the bank. You must check individual policies to see if they cover both the bank and yourself!

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