Whether you’re new to the homebuying process, or even a seasoned buyer, you likely have several questions about title insurance and how it works. Title insurance is an indemnity policy protecting mortgage lenders and homeowners against monetary loss if post-settlement title defects surface or the loan is deemed unenforceable. Read on to explore some of the most commonly asked questions and answers surrounding the topic of title insurance.

Lender’s vs. Owner’s Title Insurance

Before delving further into these FAQs, it important to understand that there are two forms of title insurance: lender’s vs. owner’s. While lender’s title insurance guards the economic stake of the loan or mortgage company, an owner’s policy protects the homebuyer’s ownership rights and financial interests in the property. For more in-depth information, please visit our Title Insurance page.

FAQs About Title Insurance

Title insurance is integral to the homebuying process for many individuals. To help you understand more about this topic, we have listed five commonly asked questions and associated answers about title insurance:

What Is Covered by Title Insurance?

An owner’s title insurance policy covers court costs or other legal fees incurred should you need to defend your property rights. This may include protection against someone making an ownership claim to your property or other types of title defects. A lender’s policy covers the monetary investment made by mortgage lender if a title defect or other event renders the loan invalid. 

Are Title Insurance Policies Required?

Mortgage lenders almost always require homebuyers to obtain a lender’s policy as part of the home loan process. While purchasing an owner’s policy is entirely up to the buyer, this form of title insurance coverage is highly recommended. 

How Are Title Insurance Costs and Coverage Amounts Determined?

The cost and coverage amounts for owner’s title insurance policies are determined according to the selling price of the property, while lender’s policies are dependent upon the amount of the home loan.

Who Covers the Cost of Title Insurance?

A lender’s title insurance policy is the financial responsibility of the homebuyer. The homebuyer also cover’s the cost of an owner’s policy; however, a portion of this amount may be negotiated within seller concessions, if applicable. 

Do I Need a New Title Insurance Policy If I Refinance My Loan?

An owner’s policy will be effectual for as long as the property remains in your legal possession. Mortgage lenders will require you to purchase a new policy if you decide to refinance your loan, but this may be offered at a discounted rate. 

For assistance in navigating the homebuying process and understanding how title insurance applies to your real estate transaction, please contact Linear Title and Escrow today.