Real NEastate: Title insurance

Q: I am buying my first house and I was told I needed “title insurance.” Do I have to get it? How much is it and what is it for?

A: If you are buying a home, whether is it your first or your last, you need to purchase title insurance. An abstract company with a real estate lawyer will conduct a “title search” in order for the sale to proceed properly. It protects the insured from any losses sustained from defects in the title. Also, it’s required by most mortgage lenders.

Here are five other things you should know about title insurance.

1. It protects your ownership right to your home, both from fraudulent claims against your ownership and from mistakes made in earlier sales, such as mistake in the spelling of a person’s name or an inaccurate description of the property.

2. It’s a one-time cost based on the price of the property and it’s regulated in Pennsylvania, so it should cost you the same at any title company.

3. In Pennsylvania, it’s always paid for by the buyer, but this can vary from state to state.

4. Discounts on premiums are sometimes available if the home has been bought within only a few years, since not as much work is required to check the title. Ask the title company if this discount is available.

5. Many title companies offer “enhanced policies,” which provide more coverage. It usually costs about 10 percent more than a regular title policy.

Stacey McCarthy is a real estate agent with the McCarthy Group of Keller Williams. Her Real NEastate column appears every Wednesday on NEastPhilly.com. See others here. Read other NEast Philly columns here.