Yes, title insurance is something first-time homebuyers should pay attention to, even though it’s often overlooked. Here’s why:
What Is Title Insurance?
Title insurance protects against hidden problems with a property’s ownership history—issues that might not show up during the title search but could surface later. These include:
- Unpaid property taxes or liens
- Errors in public records
- Undisclosed heirs claiming ownership
- Fraud or forgery in past transactions
Types of Title Insurance
- Lender’s Title Insurance
- Required by most mortgage lenders
- Protects the lender’s interest in the property until the loan is paid off
- Does not protect you as the homeowner
- Owner’s Title Insurance
- Optional but strongly recommended
- Protects you from legal and financial claims against your ownership
- One-time premium at closing; coverage lasts as long as you own the home
Why It Matters for First-Time Buyers
- Legal Protection: Covers attorney fees if someone challenges your ownership
- Financial Safety: Shields you from paying old debts tied to the property
- Peace of Mind: Ensures your largest investment is secure for life
Cost
Typically, owner’s title insurance costs about 0.5% of the home’s purchase price and is paid once at closing.
Bottom Line:
While you can technically skip owner’s title insurance, doing so leaves you vulnerable to costly surprises. Most experts recommend buying it for long-term protection and peace of mind.
