What is Title Insurance?
Title insurance protects against hidden title hazards that may threaten your financial investment in your home.
There are two kinds of title insurance: Lender or mortgagee protection
Owner’s Coverage
Most lenders require mortgagee title insurance as security for their investment in real estate, just as they may call for fire insurance and other types of coverage as investor protection. When title insurance is provided, lenders are willing to make mortgage money available in distant locales where they know little about the market. Owner’s title insurance lasts as long as the the policyholder – or their heirs – have an interest in the insured property. This may even be after they have sold the property. Depending on local practices and state law where the property is located, you may pay an additional premium for an owner’s policy or you may pay a simultaneous issue charge – usually a smaller amount – for the separate lender coverage. You may even split settlement costs with the seller for the lender’s or owner’s policy.
A preliminary report will be created from the title company, and that preliminary report will be sent to the escrow company for review. The escrow will work with the title company, the lender and other parties to the transaction to settle items listed on the preliminary report. Once everything is cleared, the title to the property is then transferred under the terms of the escrow instructions and the appropriate title insurance policies are issued.