Is Title Insurance Necessary for an NJ Home Mortgage?

This is a great question since most people have no idea what title insurance even is. But it’s an important question since it can be so invaluable towards the purchase of a NJ home mortgage. Therefore, the purpose of this article will be to give a brief description of how titles can become defective and hopefully make it easier for you to decide if Title Insurance is appropriate for you when purchasing your NJ home mortgage.

What Does a Title Company Do When You’re Purchasing an NJ Home Mortgage?

Ultimately, before a NJ home mortgage is purchased, Title companies search public land records for matters that may affect the title to the property. However, even the most exhaustive searches may not uncover all of the possible title defects. When they search the public records, they are performing a sort of ‘connect-the –dots’ process in which they are tracking the property as it passed from one owner to another.

Every title is made up of many different “rights” and “interests” that may in fact be owned by different people. The “owners” of the property own the most valuable part of the property’s rights and interests, such as rights of possession, use, occupancy, enjoyment, etc. But there may be other entities that have rights to the property as well, such as easements for utilities or NJ home mortgages.

Therefore, before you purchase an NJ home mortgage on a piece of real estate, it is imperative that you know what rights or interests the seller is going to pass along to you. Furthermore, you will also need to know who else may have the rights or interest in the property, and especially any encumbrances against the property that may affect the use or enjoyment of the property. As a result, the title search – in theory – will uncover all of these rights and interests.

The potential trouble arises out of disjointed, recorded keeping. The offices within a county or township that holds the records for deeds, NJ home mortgages, and documents pertaining to the land are often kept in different offices than those that record lawsuits, marriages, divorces, and insanity proceedings. Therefore, despite an exhaustive title search, hidden defects can and still emerge after the closing of a NJ home mortgage.

So, Do You Need Title Insurance When Purchasing a NJ Home Mortgage?

Title insurance provides protection against serious financial loss due to a defect in the title to a property already purchased. For a single, one-time premium, which is generally a reasonable amount in relationship to the value of the NJ home mortgage, you can receive the protection of a title insurance policy, which is backed by the reserves and solvency of the insurance company issuing the policy. The title insurance policy will cover both claims arising out of title problems that could have been discovered in the public records, as well as those so-called “non-record” defects that was not discovered in the record, despite a thorough search.

Furthermore, a title insurance policy will not only protect the insured owner, but also your heirs for as long as they hold the property. Finally, the Title Company will not only satisfy any valid claim made against the insured’s title, but it will pay for the costs and legal expenses of defending against a title claim.