When you buy a home, you need both.
Insurance is a necessity in life. When you are buying a home in Locust Grove or elsewhere, there are two types of insurance that you will need- homeowners insurance and title insurance. Both of these protect you as a buyer from unforeseen issues. Do you need to have homeowners insurance or title insurance? If you are a buyer getting a mortgage, then yes. If you are a seller, you may not need it, but it can be very risky to not have it. Keep reading to learn a little more about each type.
Homeowners Insurance
Did you know that there is no law that requires you to have homeowners insurance? However, if you are getting a mortgage, lenders will require a homeowners insurance policy to be in place. Why? Because homeowners insurance protects your home from a huge financial loss if the home is damaged.
There are many different types of homeowners insurance out there. If you’ve recently got an accepted offer on a home, now is the time to start doing a little research about which policy is the best for you. Your lender will ask you for information about the policy before you close on your home.
Common Types of Coverage Include:
- Dwelling: covers damages to home
- Personal Property: covers losses to the things inside your home
- Additional Structures: covers damages to other structures on the property like sheds
- Loss of Use: pays living expenses while a home is being repaired
- Legal Bills: covers medical bills if a person is injured in home
Buyers should talk with several homeowners insurance companies to find the one that works best for them. Premiums and deductibles will vary by company, what is offered, and what type of policy you decide to use. Many times you can also bundle the homeowners insurance with car to save money.
Popular homeowner insurance companies (but aren’t limited to) include:
Do I need homeowners insurance if I don’t have a mortgage?
If you do not have a mortgage, there is no law that requires you to have homeowners insurance. However, this can be very risky. If you’ve lived in your home and built equity, you are in danger of losing all of it if your home is lost. Typically even when people have finished paying off a mortgage, they maintain homeowners insurance.
Title insurance
Title insurance is also an important form of insurance for buyers to invest in when purchasing a home. This type of insurance protects buyers from errors made by the title company while investigating if the seller has the rights to sell the property. For example, are there liens on the property? More than one owner? While not common, missing any of these issues can cause issues and questions about who really owns the property.
There are two types of title insurance:
- Owner’s Title Insurance: Optional to purchase, this insurance protects the buyers from issues such as liens on the home, undisclosed easements, backed taxes, errors in public records, or ownership claims.
- Lender’s Title Insurance: Lenders will require buyers to acquire lender’s title insurance before they close on a home. This policy protects the lender for the same things as an owner’s title policy.
This is a great resource for more information about title insurance in the state of Virginia.
Do I need to get title insurance?
Like homeowners insurance there is no law that requires buyers or sellers to have title insurance. While, in most cases, buyers acquiring a mortgage will be required by the lender to purchase lender title insurance, buyers also have the option to get owner’s title insurance. While it is not commonplace to find errors in the ownership of a property, there are times where errors are uncovered and being protected from errors can save you money.
The cost of title insurance can vary by title company. Typically this cost is part of the closing costs that buyers and sellers pay at settlement.
