[784caroline]

Originally Posted by Bonanza

A lender's policy is completely different and separate
from the other title insurance policies.
It benefits only the lender and you have to pay for it.
The lender requires it; otherwise you don't get the loan.
And yes -- it is based on the mortgage amount, not the sales price.

In addition to that policy, as a buyer,
there is an owner's policy which is completely separate.

Hopefully, this answers your question.

So buyers (new and resale) should be aware they are NOT insuring their entire home value just the amount of the mortgage (which declines) if the owner decides to piggy back on what the bank holding their mortgage requires in terms of title insurance.. If you are buying a $300K home and have a $150K mortgage, you still are 50% exposed.

[Challenger]

Originally Posted by Sunshine Shelly

Thanks everyone for your feedback. Great information from the group. We're settling on a new villa on Friday and we bought the insurance.

Peace of mind is worth a few bucks. Welcome to our little piece of Valhalla.

[Bonanza]

Originally Posted by 784caroline

So buyers (new and resale) should be aware they are NOT insuring their entire home value just the amount of the mortgage (which declines) if the owner decides to piggy back on what the bank holding their mortgage requires in terms of title insurance.. If you are buying a $300K home and have a $150K mortgage, you still are 50% exposed.

No, you are not exposed and you are completely insured.

Let me try to explain this in a different way . . . You buy a property and you have a mortgage. For the purpose of this explanation, the amount doesn't matter. Your lender requires title insurance. For all intents and purposes, this has no meaning for you and doesn't affect you other than the fact that you have to make a one-time payment for it at closing. Don't worry about the lender's policy; forget about it. From that point on, you will never hear anything about the lender's policy at all.

Now, you want title insurance. The title company or attorney who handles your closing will do what is called a "simultaneous issue." This means the lender's policy and your policy (which is completely separate and only yours) will be issued at the same time -- at closing.

The lender is insured for the amount of your mortgage. They're happy!
You are insured for the total amount of your new home. You're happy . . . and safe!