What Is The difference Between Owner’s Title Policy and Lender’s Title Policy
Photo taken by Diana Walton- Houston First Time Home Buyer Specialist
Hello and welcome to Houston First Time Home Buyers Edition, where we provide useful information to help Houston first time home buyers make the most informed decision when it comes to buying, decorating, and maintaining their first home.
A Owner’s Title Policy protects the home owner for the full purchase price of the home until the home is transferred. If the owner dies, his/her heirs are automatically protected. In addition, the policy protects the owner against fraud, forgery, prior liens, lack of access, erroneous legal description, improperly recorded deed, building encroachment on property, old right-of-way and another person claiming stake in the property.
The lender’s Policy only covers the amount of the mortgage until the mortgage is paid in full. As you can see, the main difference between the two policies is that the lender’s policy protects the lender and the owner’s policy protect the home owner. Here are some additional information regarding both policies.
If you get a loan to purchase your new home, a lender’s title policy is a legal requirement of the sale.
The home buyer pays for the lender’s title insurance.
The lender’s policy will cover the amount of the mortgage.
The owner’s title insurance protects the owner from claims against the title that predate the purchase of the property.
The owner’s title insurance policy is usually optional, the lender’s title policy is not.
One of the most common lawsuits that happens comes from tax lien for unpaid taxes.
Title insurance usually does not protect boundary disputes with your neighbors. However, this protection can be purchased as a separate premium.
Owner’s title policy is not the same as home owner insurance. They are different.
The title insurance does not protect the homeowner against natural disasters or fires. Just in case you are asking yourself if you should get owner’s title insurance, while there is a one-time cost associated with the policy, getting it does provide peace of mind for as long as you own the property.
True, the chances of problems with the title arising after closing might seem small, however, the consequences of not having it may be too great to ignore. Being safe is always better than being sorry.
As always, thank you so much for stopping by. Remember, if you are thinking of purchasing your first home, please contact us. We are here to help. We have been helping Houston first time home buyers since 2011 and we can help you. I hope you have an amazing day. Until next time...Diana
