Title Insurance

• Once the title is found to be valid, the title company will likely issue a title insurance policy, which protects lenders or owners against claims or legal fees that may arise from disputes over the ownership of the property.

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• There are two main types of title insurance:

  • owner’s title insurance, which protects the property owner from title issues,

  • and lender’s title insurance, which protects the mortgage company.

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• You, the home buyer, will pay for the lender’s title insurance when you close on the house, but it’s also a good idea to make sure you have an owner’s title insurance policy as well (in some areas of the country, sellers pay for these policies; in others, the buyer must purchase it).

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• For example: You buy a home and get both lender’s and buyer’s title insurance, but then someone comes forward claiming they are the rightful owner of the home. If, in fact, the title was wrong and they are the rightful owner of the home, your title insurance policy will likely pay you the value of the home and the lender the amount they lent you to buy the home.