Purchasing a home with cash is often a smart move, as it can allow you to speed up the real estate closing process and avoid the need to pay for a mortgage. But you also need to be aware of recurring expenses, like homeowners insurance and homeowners association fees, which can add up fast. In addition, you’ll likely have to pay for owner’s title insurance if you buy a property with cash.
The Cost of Title Insurance
When you buy a house, you get a document called a deed that proves the seller has transferred their legal ownership, or “title,” to the home you are buying. This means you own the home legally, but there are a few things that can cause a title to be defective and give someone else rights to the property. These include unpaid taxes, liens against the property or money owed to contractors for work done on the home before you purchased it.
The good news is that most financial lenders require you to purchase title insurance if you are financing a large portion of the home’s value. In fact, many lenders will even offer you a lower rate of interest if you can show proof that you’ve purchased title insurance in the past. Click here https://www.kcpropertyconnection.com/ks/wichita/
Why You Need It
When you’re buying a home, you need to be sure that the property has no unrecorded issues that could affect your ownership rights, such as liens against it or a history of previous owners making improvements that encroach on the property’s boundary lines. A defect in the title can prevent you from getting a mortgage, and it could also result in financial losses or other problems down the line.
A homeowner’s title policy protects you from defects in the title that exist when you bought the home, even if they’re dated back before you purchased it. It can help you resolve any ownership disputes, such as paying off a lien or defending against a lawsuit filed against you by someone who claims to have a legal right to your property.
It also gives you peace of mind, allowing you to make an informed decision about whether or not to sell the home later on. If you’re a first-time home buyer, title insurance may also help you find the best lender to help you obtain a mortgage.
Lender’s Policy
The lender’s policy is required by law and is the title insurance policy your lender will recommend you take out to secure the loan. It will provide protection from any title defects that may have come to light during the underwriting process, such as liens against the property or back taxes.
Alternatively, you can opt out of the lender’s policy and receive an owner’s title policy that covers your interests as the homeowner and can last as long as you own the property. You’ll usually pay a higher premium for the owner’s policy than you would for the lender’s, but you may be able to save money by shopping around for the best price.