Colony Title Associates

Owner’s Policy vs. Lender’s Policy: What Is The Difference?

Everything you wanted to know about title insurance policies!

When you buy a new property, it’s typically required that you purchase title insurance for it. If you are borrowing money to purchase the new property or refinancing the current mortgage on your property, the lender will require that you purchase a lender’s title insurance policy. Title insurance assures that either the new owner or lender has clear legal title to the property. This becomes very important if any problem regarding title arises.

Owner’s Policy

Typically, an owner’s policy is advisable but seldom required. With an owner’s policy, the homeowner is protected as the purchaser of the property. If for some reason the title passed to you and is found to be invalid, encumbered by a prior lien or debt, or for other issues affecting the underlying title to the land, an owner’s policy will be able to protect your legal rights and title to the property.

Lender’s Policy

The bank is protected under a lender’s policy. Most banks will require you to purchase a lender’s policy when you purchase your home. The only way a bank will be able to provide a loan to you is with the purchase of a lender’s policy. Oftentimes, banks will roll the payments from the lender’s policy into your mortgage, making your overall payments a bit easier to make. Although a lender’s policy offers very similar protections to the owner’s policy, the key difference is that the lender’s policy will protect the lender instead of the property owner.

Limitations

It is essential to make note that neither one of these policies is the same as a homeowners insurance policy. These title insurance policies simply address the legal disputes that can arise in a real estate transaction regarding legal title to the property. These policies do not protect homeowners from natural disasters or damage to their homes from fires. The purchase of a homeowners insurance policy would be required to ensure that your home is protected from such disasters.

A Title Company You Can Trust: Colony Title

At Colony Title, we will help you through the process of getting your property’s title and help you avoid the pitfalls of hidden costs while you buy your home. We are also well trained in identifying any and all errors in public records and helping you resolve them. We specialize in real estate title insurance in both Maryland and Washington, D.C., and we will perform an expert title search, check through all past documentation, and examine records for any fraud or forgery. For more information on how we can get you into the home of your dreams, contact us online or give us a call at (410) 884-1160. To get more updates on housing markets and how to get into your home, follow us on Facebook, Twitter, LinkedIn, and Google+.