Lenders Title Insurance

Lenders Title Insurance

When purchasing a home it can become overwhelming with how many insurance policies one might encounter.  These policies can include homeowners insurance, flood insurance, mortgage insurance, title insurance, etc.  When considering title insurance, it can be confusing as to what is required and what is optional.  Many times when one is beginning the mortgage process, it can become puzzling as to what certain insurances are, and what exactly they are protecting.  With title insurance, there are two different types of policies; lenders and owners.  Today, I am going to discuss a lenders policy. 

Lenders Title Insurance Property GuidingA lenders title insurance policy is a third party charge also referred to as an ALTA policy; which the acronym is for American Land Title Association.  This is not a finance charge and is required on every loan in which there is a mortgage.  In other words, if one was to pay for the home with cash, they would not need the lenders policy.  Yet, it is still not considered a finance charge.  The premium for this policy is collected on the HUD-1 Settlement Statement.

The lenders title insurance policy protects the lender in the event of title defects, sometimes referred to as cloud of title or a cloudy title.  It does not however protect the lender from tax liens.  Typically, the lenders insurance is paid for by the buyer (unless otherwise noted on the purchase contract) and is never paid for by the lender.  Unlike a typical insurance policy that renews every year, a lenders title insurance premium is only paid once and the policy follows the mortgage even when it’s transferred from one servicer to the next.  This is noted on the policy with the acronym ISAOA which stands for Its successors and / or assignees.  ISAOA means that the customer pays the ALTA premium at the time of closing with their current lender, and the same policy follows the loan to each servicer that follows.

Not sure who to call or where to start? Contact me today for a 100% free no-obligation loan inquiry analysis.

Matt Pell,  Loan Officer
Mortgage Warehouse, LLC
(239) 672-8502 – Direct Line
(239) 344-9223 – Fax
Matt@mortgagewarehouse.com
www.facebook.com/themortgagewarehouse
Company NMLS ID – 137154
Individual NMLS ID – 1018529
Better Business Bureau Rating = A+

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Posted on November 4, 2013, in Finance and tagged , , , , , , , , , , , , , . Bookmark the permalink. 1 Comment.

  1. Matt, easy to understand explanation of lenders title insurance. Great job!

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