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What is Title Insurance?

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For most people, buying a home is the biggest investment they will ever make. Knowing this, most homeowners protect that investment by purchasing insurance against hazards such as fire, theft and weather damage. But there is another hazard - one which can pose an even greater risk to home ownership - defects in the title to the property. You can avoid the risk losing part or all of your investment through title insurance. Title insurance is available for both property owners and mortgage lenders. It covers the buyer up to the purchase price and the lender up to the mortgage loan amount, whether a purchase loan or a refinance. You only pay once - at settlement - but insurance protection lasts as long as you own the property. In preparation for settlement, the title company performs a detailed examination of the historical records concerning the property. The search not only confirms ownership of the property, but also reveals such matters as unsatisfied mortgages, judgments, easements, other restrictions and encumbrances affecting the property. It will also disclose favorable matters, such as easements and reservations benefiting the property. The title company's report will provide a basis for the seller to resolve any outstanding issues prior to settlement, so that the buyer will be assured of getting "clear" title and the lender's mortgage will be a first lien on the property. In the event an undisclosed claim arises to challenge to your ownership of the property, the title insurance policy protects you by defending your title - in court if necessary.