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Protecting Your Home With an Owner’s Policy
There are two types of title insurance. The first is owner’s title insurance, called an Owner’s Policy. The second is lender’s title insurance, called a Loan Policy. To start, most lenders require a Loan Policy when they issue you a loan. The base amount of this policy is the dollar amount of your loan. It only protects the lender’s interests in the property. It does not protect the buyer. Owner’s Policy is protection for YOU, and read on learn how neglecting to purchase a policy may adversely affect you.
In The News
Recently in the news, a homebuyer who purchased a home on a land contract. At this time, they made monthly payments of $1,500 to the seller until they were able to secure a loan from a national lender. At the time, the lender required the buyer to purchase a Loan Policy. Additionally, the law does not require one to purchase an Owner’s Policy, the homebuyer closed on the home. The Loan Policy is only for the benefit of the lender.
Fast Forward a Few Years
Nevertheless, several years later, their house was being foreclosed upon! How could this have happened? Surprisingly, the previous owners never paid off a loan against the property. The current lender required a Loan Policy, so their interest in the property was covered. An Owner’s Policy would have covered the homeowner in this situate. Unfortunately, without title insurance, they lost their home. The resulting foreclosure will adversely affect their credit standing for years to come. The homebuyers in the story above stated,
“We didn’t buy title insurance. We were first-time homebuyers. Had we known about title insurance, [we] definitely would have gotten it.”
Many homeowners mistakenly think that because a title search (Learn More about the Title Search Process) has been done on the property their interest is protected.
One thing is certain…More homeowners need to be aware of the protection an Owner’s Policy! They would purchase one, and eliminate the unnecessary risk of losing their home.