Title insurance seems like just one more expense I have to pay when I buy or refinance a home. What exactly does it cover?
Title insurance protects against problems affecting the title to your home, possibly your most valuable asset. There are two types of title insurance – a lender’s policy, and an owner’s policy. When you obtain a loan, (and a refinance is a new loan), the lender will require that you purchase a lender’s title policy to protect their investment in the property. Owner’s title insurance is optional, but it protects the homeowner by paying claims and legal fees should a problem arise. You usually only purchase an owner’s policy at the original sale, not on a refinance.
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