Title Insurance
What Is Title Insurance?
Title insurance is a policy that protects against financial loss due to defects in a property’s title.
Title issues may include:
- Ownership disputes
- Liens or unpaid taxes
- Clerical errors in public records
- Fraud or forgery
There are two types:
- Lender’s title insurance (required by most lenders)
- Owner’s title insurance (optional but recommended)
Why It Matters in a Mortgage
Title insurance protects:
- The lender’s security interest
- The homeowner’s legal ownership
Without clear title, a lender will not fund a mortgage.
Title insurance ensures there are no undiscovered claims that could threaten ownership after closing.
How It Works
A title company conducts a title search before closing.
If no issues are found, insurance is issued.
If a defect arises later, the insurer covers legal defense and potential losses.
Title Insurance vs. Homeowners Insurance
Title Insurance → Protects ownership rights
Homeowners Insurance → Protects physical property
FAQs About Title Insurance
Is owner’s title insurance required?
No, but often recommended.
Is it a monthly payment?
No, it’s typically paid once at closing.
Does it cover future disputes?
It covers issues tied to past title defects.
Related Terms
