Whether you’re buying a condo for sale in Grand Junction, a single-family home for sale in Loma, or a home with land for sale in Fruita, there should be title insurance. There are two types of policies, though: Lender’s title insurance and owner’s title insurance.
Lender’s Title Insurance
A lender’s title insurance policy, which you’ll be required to buy when you’re borrowing money to buy a home, is typically based on the dollar amount of your loan.
This policy protects the lender’s investment in your home (the mortgage they’re giving you so you can buy the house or condo unit). It saves the lender from losing big if a title problem comes up that costs you the ownership of the home.
Typically, the policy amount on the lender’s title insurance shrinks a little each year until you’ve completely paid off your mortgage loan.
A lender’s title insurance policy only protects the lender—not you, the homeowner. That means this policy won’t pay your legal fees or cover the loss of your home equity if you lose in court. For that, there is an owner’s title insurance policy.
Owner’s Title Insurance
A homeowner’s title insurance policy is generally issued for the exact dollar amount of the home’s price. You won’t have to keep paying it over the life of your loan, though. It’s usually a one-time fee that you pay at closing, and the insurance lasts as long as you or your heirs maintain an interest in the property.
In Colorado, the Owner’s policy is almost always paid by the seller.
This type of policy does protect you if a title problem comes up that the insurance company didn’t discover while conducting their initial title search. If your policy includes it, the title insurance policy will cover your legal fees when you have to defend your ownership; some policies also cover the loss of your home equity if a title problem comes up.
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