Title Insurance Policies
You’ve decided on a home you like, and now you want to purchase it. In order to obtain a mortgage, your lender is demanding that you take out a title insurance – owner’s lender’s policy. Often times, there are two different types of policies in play–one that protects the lender, and one that protects the homebuyer. What are the differences between these two policies, and are they both necessary?
Title Insurance- Loan Policy
When finalizing a home loan, mortgage lenders seek to protect their investment. One of the ways of doing so is by getting insurance in the form of a loan policy that secures its interest in the value of the titled property. This helps the lender to minimize the risk involved in lending money for the purchase of real property. Loan policies differ slightly from owner’s policies because they only insure the outstanding amount of secured debt, rather than the face value of the policy. For example, if real estate was purchased for $200,000 and a down payment of $40,000 was made, the loan policy would only protect the lender’s interest in the lesser amount of either $160,000 (mortgage amount) or the outstanding amount of secured debt at the time of the insurance claim.
Title Insurance- Owner’s Policy
While the loan policy discussed above protects the lender, it does not offer any protection whatsoever to the homebuyer. When the homebuyer purchases her own policy, then she is covered, and to a greater extent than would be the case with the lender’s policy. Since the lender’s investment and the owner’s investment are distinct, so too are the title insurance policies. Returning to the example above, with an owner’s policy, the homebuyer would be insured for the entire face amount of the policy, which would be $200,000, or the total price paid for the home.
Title Insurance in Atlanta
As you can see, obtaining the proper title insurance policy/policies can be a little complicated. If your lender is telling you how to proceed, but you’re not entirely sure, contact Wharton Law today at (404) 965-2767 so we can help straighten things out. Here at Wharton Law our attorneys and staff have many years of experience advising clients as to the best way to handle real estate closings. We will help you take the proper steps to protect your interests, and also fully resolve any doubts you might have along the way. For title insurance in Atlanta, you have no better option. Contact Wharton Law today.