For first-time homebuyers, purchasing your first home in the Charleston, SC area can feel intimidating and overwhelming. There are questions such as, what can I afford? What is a good interest rate? Is my credit good enough? How much should I put down? There are so many things to consider whenever buying a home. But one thing you don’t want to overlook is title insurance. This policy protects you if there are any unknown issues that come up with the home’s title that could threaten your ownership and it’s definitely worth the cost. Here’s some information to help you understand what title insurance is and what it covers so you’re not caught off guard if you are ever in need of it!
What is Title Insurance?
A title policy is a one-time purchase that protects you against unpleasant surprises with the title to your home down the road. During the escrow process of buying your home, the title company will perform a search to look for any surprises in wills, deeds, or trusts to trace the history of the property. The title search will make sure that all past liens and mortgages are paid, no one holds an easement on the home, and that there are no pending legal actions that could cloud your title to the home.
Types of Title Policies
There are two types of title insurance policies ~ a lender’s policy and an owner’s policy. While both can protect, they do differ from one another. A lender’s policy will pay off your mortgage if it turns out that your home has an undiscovered lien. So yes, you wouldn’t be responsible for the mortgage any longer, however, you would risk losing your house. An owner’s policy covers all of the expenses associated with buying a home, including your down payment, so this policy is definitely the more favored one by real estate experts. However, an owner’s policy can vary in what they do and do not cover so it’s a good idea to shop around. The standard policy covers up to the purchase price of the home, which means you will get back the down payment and payments you’ve made.
Why It Matters
When you buy a home, you want a clean title that gives you full ownership of the home. Imagine moving into your new home only to discover the previous owner failed to pay years’ worth of property taxes ~ taxes for which you are now responsible. Or, if the home was sold without getting the signature of a former spouse who co-owned the home and now wants to stake his or her claim to the property? Or a contractor who did work on the roof five years ago was never paid and has now put a lien on the home? A title policy protects you from these unforeseen title issues with a one-time fee.
How to Buy Title Insurance
The only time you can buy title insurance is during the closing of your home. In some areas, the seller purchases the owner’s policy, and the buyer purchases the lender’s title policy but both will go into effect at closing. Your escrow agent will start the process of getting title insurance not long after your purchase agreement is finalized. As a buyer, you have the right to buy title insurance from any company you like. You may find it more cost-effective to buy your policy from the same title company as the lender. Title insurance can cost up to $1,000. While this can be a big expense while already purchasing a house, it’s worth it to protect your interest in the home and ensure you’re never left on the hook for someone else’s debt.
Call Team Lail-Chambers to Close on Your New Home in Charleston, SC!
In today’s real estate market, it’s more important than ever to make sure your budget includes any fees and payments due at closing. If you are feeling overwhelmed by all that this entails, the best way to understand what you will need at the closing table is to work with Team Lail-Chambers. Our team of experts, led by Bob Chambers and Pheobe Lail-Chambers, has the Lowcountry knowledge to fit you with the home of your dreams in Charleston! We work with you to find a home that fits your budget, taste and lifestyle. We can’t wait to help you. Don’t delay, give us a call today!