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When you buy a home or refinance one, you need a simple insurance policy that I just canít get people to buyÖeven though being without it can be deadly to your finances.

Picture this: When you do a refinance, you dump Bank A and pay them off with proceeds lent by Bank B. But what if the money is stolen while being wired from bank to bank? In many states, you could owe both mortgages ó even though you were just doing a refi in good faith!

The Denver Post reports this is happening in case after case. It could be organized crime tapping into a bankís wiring system and swipe money after the refi has taken place. Or it could dishonest employees who steal the money at the time of the refi.

This is just a simple example of how you can end up with financial Armageddon through no fault of your own. The people in The Denver Post article didnít do anything wrong. In fact, they were doing everything right by getting a lower interest rate on their housing payment.

There is any number of similar circumstances I talked about over the years that come to mind. I recall one case where people bought in a subdivision and the heirs of the original property owner alleged in court that the land was never properly purchasedÖso it still belonged to the family. All those people who bought in the subdivision lacked a key thing and lost their homes and whatever money they had in the deal.

They didnít buy ownerís title insurance.

In general, ownerís title insurance (aka simultaneous title insurance) protects you from the possibility that someone may come along and contest your ownership of a property. Thereís a big misimpression that when you buy a home, youíre paying a premium for title insurance and that protects you. No! That insurance just protects the bank.

Donít rely on the title insurance the lender buys; you need your own.

In the case of the refis, homeowners are getting hurt, not the bank. It shouldnít be this way, but the fact remains that ownerís title insurance is the best defense (though not ironclad) you have against the unknown. The odds of something crazy like this happening? Almost none. And if it does happen, itís not your day, month or year,
thatís for sure!

So if you are buying or refinancing, ask about ownerís title policy. It is the best insurance you can buy when you buy that home.