Lenders’ Title Insurance Policies

About Title Insurances | Owners' Policies | Lenders' Policies

You are not required to take out an owner’s title insurance policy, but many homebuyers want the protection.  However, your mortgage lender will require that you take out lender’s title insurance.

Since your new home serves as the collateral on your mortgage, your lender also wants protection against any title defects or disputes that might arise in the future.

In fact, your lender will not release your loan funds without this assurance that its claim on your new property is a valid lien based on a valid deed.  The lender’s policy also insures that its lien has priority over any other liens, and that the lender will suffer no loss if a future dispute over the title limits legal access to the property (including the ability to sell it to someone else).

A lender’s title insurance policy provides coverage for the life of the mortgage.  The amount on the policy is equal to the amount of the loan.  As with an owner’s policy, there is a one-time payment.

Homebuyers pay for their lenders’ title insurance as part of their “closing costs.”  States regulate the amount of the fee that may be charged to consumers, but in all cases, the fee is a one-time, non-recurring cost.