When you purchase your home, you receive a document usually called a deed, which shows the seller transferred their legal ownership, or “title” to their home, to you. Title insurance can protect you if someone later sues and says they have a claim against the home from before you purchased it. Legal claims could 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 could save money. If you choose to buy owner’s title insurance, the total cost is usually 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 settlement agent, lawyer, lender, real estate agent, or your title insurance company might give you an itemized list of fees at closing, including your title insurance cost. This could be different than what is shown on your Loan Estimate or Closing Disclosure. This does not necessarily mean you are being charged the wrong amount.
