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Tags: finance, home equity loans, the importance of title insurance
 I was surfing CNN online the other day when I saw this very interesting and very troubling video. It was a report CNN had made concerning a homeowner, Maria Espinoza, whose home was in the process of being foreclosed. Nothing out of the ordinary I suppose since with the way the economy has been going these past few months one more foreclosure is hardly worth commenting about.
However, this one is for the simple reason that Ms. Espinoza and her husband haven’t missed a mortgage payment and are in fact up to date. Now it’s worth commenting about don’t you think? How would you feel if you received a legal notice stating in no uncertain terms that your home, the one that you have been saving up for all this time, the one that you have been paying the mortgage on, was suddenly being foreclosed and will be sold to pay for a debt you don’t even know about.
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And how worst will you feel when you find out that it was because of a previous owner—not the one you purchased the home from—who apparently failed to pay back a VA loan he or she borrowed that started all this. I’m sure you would be confused, devastated, and feel helpless right? Even the best laid plans can be torn asunder.
And the scary part is what happened to Ms. Espinoza can happen to you as well. When you purchase a home a deed examiner will typically do a deed search of the public records to look for any problems with the home's deed—and it usually will go back many years.
For example, there may be a contractor’s lien on the property or a tax lien for the past few years. These searches help clear things up before you sign at the closing. However, no matter how careful or diligent a title examiner is he is only human and as with any human they can make mistakes which could ultimately result in a financial loss for you if you’re not insured against it.
Your interest can be protected by getting title insurance. The purpose of title insurance is to cover you for losses that you may incur due to defects in the property deed that occurred prior to your ownership, such as in the case of Ms. Espinoza. Some of the problems that are typically covered by title insurance are errors or omissions in deeds—much like what happened with Ms.
Espinoza wherein a prior lien was missed or omitted, mistakes in examining records, forgery, and undisclosed heirs. Other problems covered by title insurance include but is not limited to: misinterpretation of the deed by someone who is supposedly single but is in fact married, liens for any unpaid taxes, as well as restrictive covenants.
The cost of title insurance varies depending on your property’s value and is paid via a one time premium and remains in effect as long as you, or your heirs, retain an interest in the property. And should something come up your title insurance assures you that the title insurance company will stand behind you both monetarily and with legal defense if necessary if a covered problem arises after you buy your home.
This means that they will cover the cost of defending you in any court case against any lawsuit that attacks the integrity of your property’s deed of ownership. And should any claim prove valid, the underwriter will pay the costs of your claim, up to the policy amount or will undertake perfecting the deed as insured at its own expense.
The importance of title insurance can not be reiterated enough. What this means is that you get the peace of mind knowing that your investment is protected now and in the years to come. And in the end that is what matter’s most.
About the author
The author of this article Rick Goldfeller is a successful underground Financial Analyst who has been advising and coaching individuals for many years. Rick recently published a book on how to manage your money and attract Wealth and Financial Freedom. More info on his Finance Planning course is available HERE.
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