Lender's Policy vs Buyer's Policy

Title insurance comes in two main forms: lender's policies and buyer's policies. While similar, these two policies offer distinctly different services for the parties they serve. If you're planning on buying a Lake of the Ozarks home in 2015, it's important that you know the difference between these policies. Lucky for you, Arrowhead Title, Inc. is here to help!

Owner's Policy

In the world of title insurance, the owner's policy essentially protects you, the owner of the property, from unforeseen issues down the road. Owner's Title Insurance is purchased at closing for a one-time fee. After this upfront payment, both you and your heirs will be protected from any problems that may arise in the future for as long as you or your heirs and an interest in the property. 

The best part? If/when a situation arises that requires the protection of your owner's policy, those issues will be handled at no additional cost to you. Owner's policies only cost you the upfront, one-time fee.

As examples, the types of situations an owner's policy can protect you from include...
  • Forgeries
  • Mistakes in public records
  • Undisclosed heirs
  • Unauthorized signatures
  • Invalid power of attorney

Please don't hesitate to reach out to us for clarification! We would be happy to any questions you may have about owner's title policies.

Lender's Policy

The sole purpose of a lender's title policy, on the other hand, is to protect the lender. When you take out a mortgage loan to buy a house, the lender (i.e., the bank) spends the money to pay the seller upfront. Then you, the buyer, will spend the next fifteen, twenty, or thirty years paying the lender back. A lender's title policy promises financial protection to the lender in the event of a defective title or if you are unable to pay off your mortgage loan.

It's not surprising that most lenders require lender's title policies to be included in the real estate transaction. Typically, the buyer is responsible for purchasing the lender's policy. 

Conclusion

Since the lender's policy offers you no protection whatsoever, all of us at Arrowhead Title, Inc. strongly encourage you to purchase an owner's title policy as well. When purchased in conjunction with a lender's policy, owner's policies are extremely affordable (and remember, they only require a one-time, upfront fee).

If you are preparing to purchase property at the Lake of the Ozarks, we hope you'll keep Arrowhead Title, Inc. in mind. We treat all of our clients with the utmost respect, integrity, and accuracy. See you at closing!


Where Accuracy Matters!



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