For the most part, a lender requires a mortgage title insurance policy (paid as part of your closing cost). This type of policy will solely protect the lender’s investment in the property you’ve just purchased. The difference between a lender’s title insurance policy and an owner’s insurance policy turns on who is protected. With an owner’s title insurance policy, it’s you, as the owner, who ends up getting the protection of your interests and investments as the said property owner. Here is a helpful guide to better understand the reasoning behind lenders requiring homebuyers to purchase a lender’s title insurance policy.
What Is Title Insurance?
A little refresher on title insurance is often a helpful way to tackle the issue of needing to get a title insurance policy on behalf of the lender. Remember, a title search must always be completed to obtain any type of title insurance. It’s the purpose of a title search to ensure that both the owner along with the lender have clear title to the property. A real estate attorney or title company will perform the search before a real estate closing happens. The full title search will usually involve looking back about 40 years. However, there are a wide array of reasons for shorter or longer searches. The level of the actual search will ultimately depend on the circumstances and what the attorney feels is necessary.
The Title Search Will Always Determine Property Status
Typically, when lenders are involved in the home buying process, the title search will always be required. Lenders are always keen to get the chain of title accurate so that there are no surprises down the line. It’s why they make it a point to require that all home buyers purchase a lender’s title insurance policy to protect their interest in the property.
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+.