The title of a property refers to the legal rights the owner holds to the property. When purchasing a home, it’s crucial to ensure the property has a clear title and is free from liens or other ownership claims. Failing to do so could leave the new owner responsible for resolving these issues — unless they possess title insurance.
Title insurance comes in two varieties, both paid as an upfront charge when you buy a home: a lender’s policy and an owner’s policy.
When securing a mortgage, lenders typically require borrowers to obtain what’s called a lender’s title insurance policy, also known as a loan policy. This policy protects the lender in the event of property ownership claims. Often the lender chooses or recommends a title insurance company for you, and includes their fee on your loan estimate. This premium is typically paid during the closing, though it could be requested upon signing the purchase and sale agreement.
Owner’s title insurance is a separate policy. Usually optional but recommended, It serves to shield the buyer from any ownership claims. It’s usually purchased at the same time as the lender’s insurance, but definitely by the time you take possession of the home.
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