What is owners title insurance?
When you purchase your home, you receive a document most often called a deed, which shows the seller transferred their legal ownership, or “title” to their home, to you. Title insurance can provide protection if someone later sues and says they have a claim against the home from before you purchased it. Common claims come from a previous owner’s failure to pay taxes or from contractors who say they were not paid for work done on the home before you purchased it.
Most lenders require you to purchase a lender’s title insurance policy, which protects the amount they lend. You may want to buy an owner’s title insurance policy, which can help protect your financial investment in the home.
You can usually shop for your title insurance provider separately from your mortgage. If you shop for title insurance, you may be able to save money. If you choose to buy owner’s title insurance, the total cost will usually be lower if you use the same provider for both the lender’s policy and the owner’s policy, compared to buying them separately.
Depending on the state where you are buying your home, your title insurance company may give you an itemized list of fees at closing, which may be different than what is shown on your Loan Estimate or Closing Disclosure. This does not necessarily mean you are being charged more.
You won’t receive a Loan Estimate if you applied for a mortgage prior to October 3, 2015, or if you're applying for a reverse mortgage. For those loans , you will receive two forms – a Good Faith Estimate (GFE) and an initial a Truth-in-Lending disclosure – instead of a Loan Estimate. On the GFE, title services and lender’s title insurance are listed in Block 4 and owner’s title insurance is listed in Block 5. If you are applying for a HELOC, a manufactured housing loan that is not secured by real estate, or a loan through certain types of homebuyer assistance programs, you will not receive a GFE or a Loan Estimate, but you should receive a Truth-in-Lending disclosure.