When you’re buying a home for sale in Ellicott City, Owings Mills or another nearby community, your lender will require you to purchase a title insurance policy – but you might be surprised to learn that the insurance policy you’re buying isn’t for you.
It’s for your lender.
Here’s what you need to know.
Related: What is a title search?

Lender’s Title Insurance vs. Owner’s Title Insurance

Most lenders will require you to buy title insurance that protects them – not you – when you buy a home. A lender’s title insurance policy provides a measure of protection if someone comes along later and challenges your (or your lender’s) ownership in the home, such as a missing heir or an undisclosed spouse.

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The policy that the lender makes you buy, though, is only for the lender. If someone comes along later and challenges your ownership in the home, you’re still on the hook for legal bills and other costs – and you could lose your home.
For most people, that means buying an owner’s title insurance policy.
Your lender may not allow you to choose the insurer for the lender’s policy, but you can choose the insurer for your own policy. In many cases, though, you’ll end up saving money if you insure both your lender and yourself through the same company. That way, you only have to pay for one title search and two policies (rather than two title searches and two policies, which you’d have to do if you used another company to purchase your own policy).

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