Title Insurance Protection Is Required By All Lenders

Types Of Title Insurance

Lender’s title insurance and owner’s title insurance

• Title insurance for mortgage lenders title insurance is called a Loan Policy
• As previously state, most lenders require a Loan Policy when they issue a mortgage loan
• The Loan Policy is usually based on the dollar amount of the loan
• Loan Policy protects the lender’s interests in the property should a problem with the title arise.
• It does not protect the home buyer
• The policy amount decreases each year and eventually disappears as the loan is paid off
• Owner’s title insurance is recommended because lender’s insurance won’t protect homeowners personally if the insurance company loses a battle over legal title
• Borrowers will be required to pay for the continued fight over the title and could lose their investment in the property
• Borrowers can purchase basic or enhanced owner’s title insurance, with the enhanced title insurance policy offering more coverage for things like mechanic’s liens or boundary disputes

While the title insurance covers homeowners for things such as mistakes in the legal description of the property or human error, be aware that the title insurance will have some exclusions—particularly in cases where violations of building codes occur after you bought your home.

What Is Owner’s Title Insurance Policy

The title company will run public searches to see that the title to the home is free and clear from any adverse items but there is no guarantee that certain liens always come up.

• An owner’s title policy is required by mortgage lenders in the event if the title comes up clean
• But later some unforeseen title issues come up
• With the owner’s title policy provides coverage in the event if this is the case
• The face value of the owner’s title insurance policy is the purchase price of the property
• The owner’s title policy lasts for the duration on the subject property owner and there are no monthly payments
• The title company will charge a one time fee at closing

The owner’s title insurance policy will protect homeowners in the event if an heir to the property all of a sudden claims the title to the property and it will cover the legal defenses.

Mortgage Lenders Title Insurance Policy

Besides the owners’ title insurance policy, there is also the Lenders title insurance policy.

• A lenders title policy does not protect the buyer but the lender should any title problems arise after closing and it is normally the mortgage loan amount
• On cases where a borrower refinances their current mortgage loan, the lender is going to require updated lenders title insurance policy but not new owners title insurance policy

New lenders’ title insurance policy is still required if homeowners are refinancing with the same lender or they have just recently purchased home.

Shopping For Title Insurance & Reissue Rate

Unlike other types of insurance, title insurance is paid with a single premium at the home closing.

• Home Buyers who are buying a resale or refinancing, they may be eligible for a “reissue” rate
• This could offer a substantial discount off the regular premium
• This is because the title policy is already in effect, and the title research has already been completed
• In some states, title insurance premiums are the same no matter who
• But in the majority of states, mortgage borrowers can save money by shopping around
• Get recommendations from lenders, attorneys, realtors,  and friends
• Be sure to check out the license and reputation of different companies online

Always compare the features of each policy and get adequately covered where the homeowners are protected.

Things Title Insurance Companies Does Not Insure

Here are subjects that title companies do not normally insure:

• The title company will not insure issues not revealed through public records search such as unrecorded easements
• Unrecorded liens and money due are not covered
• Rights to utility ways that are not recorded are not covered
• Unrecorded private and/or public roads are not covered
• Any other types of encumbrances are not covered

Unrecorded rights and claims by people in possession of the subject property who are not recorded on public records are not covered.

Can Protection Be Obtained On Matters Not Recorded?

Upon application, the company issuing a new title can cover issues that are not revealed nor disclosed by inspection or survey of the subject property.

• Title companies will assess a special extra fee for an intense physical inspection of the property to check on flaws or blemishes on the title that are not recorded
• Title companies call this extended coverage

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