• Debbie Ferraro

Who Pays Lender's Title Insurance?

Lender’s title insurance is one of the ways in which a bank or mortgage lender reduces their risk in financing the purchase of a home. While many of the risks involve issues like buyers defaulting on payments or market downturns that affect home prices, title insurance is designed to offer protection if, after a sale is finalized, another party steps forward and claims rights to the property. Although this may seem like a remote possibility, it does happen and lender’s title insurance protects a bank’s interests in these circumstances. Since lender’s title insurance protects the lender and not the buyer, you might expect that the lender pays for it. The answer to who pays lender’s title insurance is a bit more complicated.

So, who pays lender’s title insurance?

The buyer is responsible for the cost of lender’s title insurance and it’s added in as part of the closing costs involved in a home sale. Although this may seem confusing since the lender’s title insurance only benefits the lender, it’s simply the way the home buying process works.

Do I have to get lender’s title insurance?

What if you don’t want to pay lender’s title insurance? Well, in that case, you won’t get your home loan! Unless you are purchasing a property without a mortgage, any lender you work with will require you to pay for lender’s title insurance so their interests are protected.

Who pays for owner’s title insurance?

You might also want to consider purchasing an owner’s title insurance policy for yourself. The required lender’s title insurance protects the bank or mortgage company, but it’s an owner’s title insurance policy that will protect your interests if someone contests the ownership of your home or property. Again, this may be a rare occurrence, but it does happen and if it does, you would be responsible for legal costs and potentially lose your home. Owner’s title insurance is a small cost for a tremendous amount of protection.

Most of the time, you’ll be paying for owner’s title insurance yourself, but in some circumstances, you may either ask the seller to purchase a policy for you or the seller may offer it as an incentive. Either way, most financial experts strongly recommend getting owner’s title insurance.

Does the lender choose the title company?

No, since you’re paying for the lender’s title insurance, you can choose the title company used. We recommend doing your research and choosing a title company that’s responsive and can accommodate any special needs you might have, like e-notarization.

How much does lender’s title insurance cost?

The amount you’ll have to pay for title insurance varies depending on the state you live in and the price of your home.

Is lender’s title insurance required for a refinance?

Yes, if you refinance your home, you’ll need to purchase a new title insurance policy. Even if you’re using the same lender for your refinance, you’ll have to get another lender’s title insurance policy.

Learn More About Lender’s Title Insurance

American Guardian Title offers best-in-class products and personalized service to all of our clients. To find out how we can serve your needs, contact us today at 833-331-8476 to speak with one of our representatives.