If you are getting ready to purchase a house with cash, you may wonder if you have to purchase title insurance. Title insurance is something almost all lenders require borrowers to purchase, but if you pay cash for a house, you will not have a lender making demands like this. Because of this, you have the option to forego purchasing title insurance; however, this might not be a good idea.
What Is Title Insurance?
Title insurance is protection you receive when purchasing a house. This insurance assures you that the title of the property is clean and clear. The title of a house is simply a document that shows the location, property description, and legalities of the property, and property titles are not always clean.
When you purchase a home, the title insurance company will research the property and the title. They will look for things such as:
- The owner of the property – If someone is trying to sell you property that he or she doesn't really own, it will be detected in this research.
- Liens on the house – If someone placed a lien on the house, the title will not be clear. The seller of the house will have to pay this off, otherwise you will get stuck with the debt.
- Easements and other legal rights – The title of a house will also show if others have rights to this property. Without a title background check, you might end up with property that can legally be used by other people for certain things. This can include utility companies having the right to use the property, or it could involve someone having the right to drill oil or dig up minerals on the land.
You would never know any of these things without a property title search. If you purchased property and later discovered an issue like this, your title insurance would cover all the costs required to fix the problem. Without title insurance, you would have to pay these costs out of your pocket.
How Much Does It Cost?
The good news about title insurance is that it is very affordable. It typically costs only 0.5% of the purchase price of a house. In other words, if you purchased a house for $100,000, you might only have to pay $500 for this insurance.
The other good news is that this is a one-time fee. You will not have to make monthly payments for the insurance. You will simply pay the fee at closing, and you will have protection on your property for as long as you own it.
Who Can You Hire To Do This?
There are several ways to get a title search on a home you are buying, but one of the best ways is to hire a real estate lawyer to perform it. Real estate lawyers are very helpful in the home-buying process, and this is one of the things they often do when they are hired by home buyers.
When a real estate lawyer completes this process, you can be certain that he or she thoroughly searched the title of this house. You will still need to purchase title insurance from an insurance company, but you will not have to pay the title company to perform the research on the title.
One benefit of having a real estate lawyer complete the title search is that he or she will also recommend a title company to use. Real estate lawyers work with numerous title companies, and they will be able to recommend the best title company in the area.
If you would like to protect yourself as you prepare to buy a house, hire a real estate lawyer. This lawyer will not only help with the title search, but he or she will also assist with many other steps that are required when buying a home. For more information, contact professionals from companies like Rella, Paolini & Rogers.