When you finance a home through a lender, you will be required to purchase title insurance to cover the amount of your mortgage loan. At the closing you will be given the option to buy additional coverage to protect your investment.

Before the closing, the title company will order a title report to make sure the sellers actually own the home and that no one else has a legal interest in the property. This process will identify any potential title problems or liens. Title insurance covers you against any future claims that did not appear on the title report. It is a one-time charge that you pay at the closing of the transaction, and it covers your future equity up to a stated maximum amount as your property increases in value. It's a small price to pay to protect such a major investment.

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