Home purchases are expensive — likely your most significant asset besides your retirement accounts. It’s good when you can save money on your mortgage by putting more down initially or arranging for low-interest financing.
But there is one expense that no homebuyer should ever skimp on, and that’s title insurance.
Why is title insurance a mandatory expense when buying real estate?
Title insurance on a $250,000 home would increase the price by several thousand. But what you are really paying for is peace of mind that should there have been some overlooked error in the property sale paperwork, your deal is still solid. The title insurance policy will cover any errors or omissions and protect you as the buyer in the event of a problem arising after you close on the sale.
But, I’m already paying for title insurance!
Yes, you are, but only to protect the lender. As the property purchaser, you still need the protection that only a homeowner’s title policy can provide. If it wasn’t a vital purchase, the lender wouldn’t make it a non-negotiable part of the purchase price.
Title insurance saves on litigation costs
Any time you wind up in court in an adversarial position you can expect to open your wallet. You will pay court costs and attorney’s fees and you could still end up owing money or even losing your home should the other party prevail.
It is always good to have your own legal guidance and advice when you are making a major real estate purchase. You cannot rely on the seller’s counsel to protect your own interests in the deal.