Title Insurance: Lender Vs. Owner
Buying a new home can be exciting and nerve-wracking all at once.
As you navigate the many steps involved in the home-buying process, from finding the perfect property to securing a mortgage loan, there is one critical step that you don’t want to overlook: title insurance.
Title insurance is a policy that protects against any defects in the property’s title. However, there are two types of title insurance policies you should be aware of: lender’s and owner’s insurance.
In this blog, we will discuss the differences between these two types of insurance and why you need them. By understanding the distinction between lender’s and owner’s title insurance, you can make informed decisions and protect your investment when purchasing a property.
If you need more help, don’t hesitate to contact Bosshardt Title in Gainesville today.
What Is Title Insurance and Why Do You Need It?
Title insurance is a type of insurance policy that protects you and your lender from any issues that may arise with the title of your property. This can include liens, easements, and other encumbrances that may affect your ability to sell the property.
When you purchase a home, you become the legal owner of the property. However, other parties may have a legal claim to the property, such as previous owners, lenders, or other parties with an interest in the property.
Title insurance helps to protect you and your lender from any issues that may arise with the title of your property, ensuring that you can enjoy clear and unencumbered ownership.
Lender’s Title Insurance
Lender’s title insurance protects the lender from any issues with the property title, ensuring that they can recover their investment in case of a problem. Lenders require title insurance to protect their investment in the property.
If there are any issues with the property’s title, such as liens or other encumbrances, the lender may be unable to recover their investment in the property. This means that if there is an issue with the property’s title that affects the lender’s ability to recover their investment, the title insurance policy will pay out the loan amount to the lender.
Owner’s Title Insurance
Owner’s title insurance protects you from any issues with the property title. Most lenders do not require this type of insurance, but it can provide additional protection and peace of mind.
Without it, if there are any issues with the property title, you may be unable to sell the property in the future. Owner’s title insurance typically covers you for the property’s full value, including any improvements or additions made to the property. This means that if there is an issue with the property’s title that affects your ability to sell, the title insurance policy will pay out the full value.
Differences Between Lender’s Title Insurance and Owner’s Title Insurance
The main difference between lender’s and owner’s title insurance is who is protected by the policy. Lender’s title insurance is designed to protect the lender from any issues that may arise with the property title, while owner’s title insurance is designed to protect you.
Additionally, the lender’s title insurance only covers the mortgage loan amount, while the owner’s title insurance covers the property’s full value.
Can You Purchase Only One Type of Title Insurance?
While most mortgage lenders typically require lender’s title insurance, owner’s title insurance is optional. However, it is recommended that you purchase both types of title insurance to ensure that they are fully protected in case of any issues with the property’s title.
The cost of title insurance varies depending on the value of the property and the location of the property. In general, the cost of title insurance is a one-time fee paid at the time of closing. The cost of title insurance is typically based on a percentage of the property’s value.
How to Purchase Title Insurance
When it comes to purchasing title insurance, you have options. While your lender may have a preferred title insurance company or agent, you’re free to choose your own provider. And when you choose Bosshardt Title, you can rest assured that you’re in good hands.
Once purchased, title insurance lasts for as long as you own the property. Once you sell the property, the title insurance policy expires.
At Bosshardt Title, we understand that this is one of the most important investments of your life, and we’re here to ensure that you feel confident and informed throughout the process. Contact us today to learn more about our services and how we can help you with your home-buying journey.