Title insurance is a form of indemnity insurance that protects lenders and homebuyers from financial loss sustained from flaws in a property title. Your closing costs may include two types of title insurance policies–do you know how they’re different? Keep on reading to learn more about the most common types of title insurance policies every homebuyer should know.
The Lender’s Policy
If you’ve ever mortgaged a home, you were probably required to purchase a title insurance policy. This lender’s policy is required by most lending institutions as a way to insure their security interest in the property. It protects the bank or other lending institution in the time until your mortgage is paid off.
The Owner's Policy
As a homebuyer, you want to protect your most important investment. An owner’s policy protects your rights as a homeowner for as long as you or your heirs have a vested interest in the property. Owner’s title insurance is often paid for by the seller, although sometimes the buyer may purchase this protection.
Both title insurance policies pay for any claims and legal fees to defend against hidden title issues. It also mitigates ownership risks by providing a thorough title search prior to the issuance of either policy. If you’re considering refinancing your mortgage, you may be required to purchase a new lender’s policy of title insurance. A lender’s policy provides coverage for the life of a loan, and refinancing a home ends the life of one loan and begins another. However, there is no need to purchase a new owner’s policy when refinancing.
DaMore Law: Real Estate & Closing Services
DaMore Law provides professional and experienced legal counsel for a range of real estate transactions. We have been representing buyers, sellers, and lenders for over 20 years. Our team of professionals has the experience to guarantee everything goes as smoothly as possible for you. Contact us today!