Title Topics: What is Title Insurance?

Posted by Amrock

Whether you know it or not, when you refinance or purchase a new home, one of the steps is to obtain a title insurance policy.
The reason why you need a title insurance policy is to protect your legal rights to own, possess, use, control, and dispose of your land.  There are two types of title insurance policies that are produced while obtaining a mortgage.

“One of the most common misunderstandings that I hear from our clients,” said Kim Kareus, Team Leader of Client Relations, “is not knowing the difference between a lender’s and an owner’s policy of title insurance.”  So, now let’s talk about the different two different types of policies.

The lender’s policy is required for the mortgage and it financially covers the amount of the loan, and provides protection to the lender.  A lender’s policy is required for both a purchase transaction and a refinance transaction.
The owner’s policy protects the land owner against any title loss, which ensures the value of the property. With title insurance, if a claim is made against the title, the underwriter must pay any and all costs associated with the defense against the challenge, and if unsuccessful in that defense, reimburse the land owner for any reduction in the value of the land.  An owner’s policy is only required for a purchase transaction because an owner’s policy protects the home owner for the entire length of time that they own that property.
Although title policies are seamlessly incorporated with a lender’s mortgage process, it is important to understand the type of policy obtained in the transaction and how important the policy is to the protection to the home owner’s property and to the protection of the lender.
Any questions?! Please let us know!