Is Title Insurance in PA Mandatory?

If you are one step away from realizing one of your biggest dreams – buying a house – you are certainly very excited. It is a huge step and probably the biggest investment you will have in your life. There are many reasons for joy because you finally get your home and the space you will arrange as you wish.

Buying a home can be a risky endeavor, as you can read at this link. It takes a lot of time to sort out many things on paper and for the property to be yours alone. In all that confusion, you must not forget to protect yourself. As a homeowner, you will most likely need several types, such as property and title insurance.

Don’t think of these policies as unnecessary expenses. You need something to protect your home and your loved ones. Property coverage is your ‘shield’ against natural hazards, negligence, or theft. Title insurance saves you from the hidden risks of losing property title.

Owner or User

The theory says that you, as the owner, have all possible rights over the house you bought. However, some legal misunderstandings may result in you being listed only as a property user. It means that you have the right to occupy and use that house, but there is a chance that you will be limited in some way. For example, you may not be able to sell it.

That can happen if there are some unresolved issues of the previous owner, like burdens listed in deeds or wills, a lien against the property you bought, etc. Maybe your house is the subject of a legal action that you are not informed about. Although responsible buyers should know all the details about the property they are buying, there is a chance they skip something. 

On the following link, see how to choose the best mortgage option:

https://www.investopedia.com/mortgage/mortgage-guide/how-to-choose-best-mortgage/ 

Potential Loss Coverage 

Title insurance in Pennsylvania is mandatory and provides no surprises in this regard. The state-regulated General Policy, adopted in 1960, governs that every homeowner must buy this coverage. It covers losses incurred due to misappropriation or non-payment of taxes or any fees related to claims or any process affecting your house. 

Many homeowners in Pennsylvania do not have this type of coverage. Because of this, they may be liable for financial loss due to errors and omissions made during the application process. The state’s General Services Administration offers a free title search to those who need it. Many insurance agents offer it, too, at no charge.

One-Time Charge

Unlike classic insurance policies, where you have to pay annual or even monthly premiums, title insurance is a one-time expense. You will usually pay it during the trade settlement. These costs can vary from company to company, but the state of Pennsylvania regulates them.

There are several options at your disposal depending on whether you buy a house and pay in cash or refinance a mortgage. Several factors will affect the premium cost. The most important is the house price or the loan amount if you take a mortgage. 

An essential tip is to never look for title insurance in PA at the last moment. That’s when you can fall into a trap and purchase a policy that is not so favorable. So start early and research all the options. Get quotes from several companies and take your time to examine them thoroughly. 

You Have a Choice

If you are a buyer, your real estate agent will suggest the best options and companies for buying insurance. You are not limited by choice, nor can anyone (seller, mortgage lender, realtor) influence that decision. Sure, some lenders may ask that you have this policy before buying a house, but it’s their right, and it’s good for you, too.

You are not obliged to opt for a title insurance company recommended by real estate agencies, banks, or lenders. That can be a result of an ownership interest, and you could be extra charged. The realtors or lenders might get some financial benefits for making you pay more.

The companies of your choice will act as a liaison when you buy or refinance your house. They won’t charge you that service, as it’s included in the premium you already paid. One major benefit of this insurance type is that the premiums paid are usually deducted from your regular income tax bill. That makes this policy an affordable way to protect a home.

Protection from Unauthorized Sale

Title insurance protects borrowers from situations where they own a house but do not have a mortgage. For instance, you can purchase a house, get a mortgage, and default on the mortgage. You get the ownership, but because of the financial burden, it’s not full. Here, you can learn about whether or not the early mortgage paying off is a good thing. 

Suppose the lender sells the property before you settle down the mortgage, or you’re late with monthly installments. In that case, they will get the money needed to pay off the loan, including the deficiency amount. You, as a borrower, might not even be aware that the resale of your property happens. You can prevent this kind of situation by purchasing title insurance at the time of house purchase.

Another possible scenario is when you own a home but don’t yet own the title to it. Suppose you borrow money to buy the property. And when you want to resell it, the lender may take possession of the title without paying your (the borrower’s) debt. So you can do nothing. To save yourself from these fraudulent situations, you should buy title insurance to protect the ownership and prevent the lender from possessing the house.

Protection for Both Sides

Title policies also protect the lender’s interest. They can be held responsible if the property purchased doesn’t conform to the loan agreement. This protection is essential for people who buy homes in areas where crime and poor living conditions devalue the property. Without title insurance, the lender may be forced to resell the property before it is paid off.

State-Regulated Insurance

Title insurance is mandatory in most parts of the United States. In Pennsylvania, it is required by law. It is an important tool that saves the investor time and effort. Homeowners can choose to add the additional coverage themselves by getting the title insurance through their mortgage broker. 

In order to get full advantage of title insurance, it is recommended that the borrower get it from the insurance company itself. The company will have all the necessary information on their website, so the homeowner can just select the option they want.

On the next source, check some basics on choosing proper title insurance:

https://www.homeclosing101.org/3-things-consumers-should-consider-when-shopping-for-a-title-company/ 

Some of the benefits of title insurance in PA are discounts. If there are two or more properties on one policy, each owner is eligible for a discount. When buying a house in a calm and prosperous neighborhood, the premiums are lower. In areas with a lot of vandalism, higher premiums are needed.

No system is error-free. Bureaucratic mistakes when buying or refinancing a house are possible and quite common. Sometimes they can be insignificant, and sometimes they can create a real mess. So, protect yourself, your investment, and your future by purchasing Pennsylvania title insurance before you buy a house.

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