Buying a new home in Maryland is an exciting but complex process. It involves many decisions and considerations, not the least of which is understanding what title insurance is and deciding if you need it.
The title of a property refers to the legal ownership and the right to use it. Sometimes, there might be issues like unknown liens, encumbrances or legal claims that could affect your ownership rights. That is where title insurance comes into play. It helps protect you from unforeseen complications that might arise concerning the property’s title. Here is what you need to know about title insurance when purchasing a new Maryland home.
Understanding title insurance
Title insurance is a one-time purchase that protects you from potential legal claims to the property. It comes in two types: Lender’s title insurance and owner’s title insurance.
- Lender’s title insurance: Most mortgage lenders require you to buy this type of insurance as part of the home-buying process. It protects the lender’s investment in the property.
- Owner’s title insurance: This type is optional and protects your investment in the property.
You might want to consider purchasing title insurance for several reasons.
Why you might consider title insurance
This type of insurance provides protection against unknown title defects. These can include mistakes in the public record, undisclosed heirs and forged documents related to the property. Without title insurance, you might find yourself facing legal battles to prove your ownership.
Title insurance can give you peace of mind. Knowing that you have protection against potential legal claims related to the property’s title allows you to feel more secure in your investment.
Potential drawbacks of title insurance
While title insurance offers valuable protection, it is not without potential drawbacks. The cost can be a concern for some buyers. Depending on the value of the property and the level of coverage you choose, title insurance can be a significant expense.
Because the occurrence of title issues is relatively rare, some people might feel that title insurance is an unnecessary expense.
Title insurance is an important consideration when buying a new home in Maryland. While lender’s title insurance is typically required, owner’s title insurance is optional and something you should carefully consider based on your specific situation and the property’s history.