Escrow & Title
In Hawaii, which type of title insurance policy covers the lender's interest in the property?
AA. Owner's policy
BB. Lender's (mortgagee's) policy✓ Correct
CC. Extended coverage policy
DD. Leasehold policy
Explanation
A lender's (mortgagee's) title insurance policy protects the lender's interest up to the loan amount, and is typically required by lenders as a condition of the mortgage.
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Key Terms to Know
Title Insurance
Insurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Chain of TitleThe sequential record of all transfers of ownership for a piece of property from the original patent holder to the present owner.
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